How Tom Price's Obamacare Replacement Plan Might Look

President-elect Donald Trump’s reported selection of U.S. Representative Tom Price (R- Ga.) for Health and Human Services Secretary may indicate how the president-elect plans to fulfill his campaign promise of dismantling the Affordable Care Act. A leading critic of “Obamacare,” Rep. Price has introduced legislation during every Congress since 2009 to repeal the President Obama’s sweeping healthcare reform law.

The following are some key provisions of Rep. Price’s Empowering Patients First Act, the latest of his Obamacare replacement plans:

1)  Coverage Mandates. By its express terms, Empowering Patients does not “provide a mandate for guaranteed issue or community rating in the private insurance market.” Therefore, two of the ACA’s strongest controls on insurers’ actuarial behaviors would revert to their pre-ACA state of deregulation.

However, Empowering Patients would maintain a form of prohibition on preexisting condition exclusions. The law would prevent denials of coverage to certain individuals based on preexisting conditions so long as those individuals have maintained “continuous coverage” for at least 18 months prior to the date of enrollment. If a person has a lapse in insurance coverage, insurers may be allowed to deny coverage or charge up to 150 percent of the standard premium for two years under the continuous-coverage provision.

As for consumer mandates, Empowering Patients would remove the so-called “individual mandate” requiring patients to obtain insurance or else pay a tax penalty.

2)  Essential Health Benefits. Empowering Patients eliminates the essential health benefits package mandated by Obamacare, which required insurers to cover a set of 10 different types of care under all insurance plans. Empowering Patients would allow insurers to cut whatever benefits they no longer wish to cover.

3)  Tax Credits. Like Obamacare, Empowering Patients would extend annual tax credits to individuals purchasing private health insurance. However, how tax credits are structured under Empowering Patients is very different than under Obamacare. Obamacare’s tax credits are based upon income, with individuals who earn less getting more assistance. Empowering Patients bases annual tax credits only upon age, providing greater help to individuals who are older. The annual tax credits proposed by Empowering Patients are as follows:

a.   $900 for children under 18

b.   $1,200 for those between 18 and 35

c.   $2,100 for those between 36 and 50

d.   $3,000 for those 51 and older

4)  Medicaid Expansion. Simply put, Empowering Patients promises to undo the Medicaid expansion initiated by Obamacare. Unlike other alternatives to Obamacare, such as Rep. Paul Ryan’s ‘Better Way Plan,’ which allow states to continue operating currently expanded programs albeit with quickly diminishing federal support, Empowering Patients does not offer an alternative to the Medicaid expansion. People previously covered by the Medicaid expansion, if removed from their states’ Medicaid rolls, would be eligible for the age-based tax credits listed above if electing to purchase coverage through the private marketplace under Empowering Patients. 

5)    Employer-Based Insurance Limits. Empowering Patients would also impact employer-sponsored insurance. Empowering Patients proposes limiting employer-tax exclusions for insurance to $20,000 for a family and $8,000 for an individual. Any additional funds above those amounts would be treated as taxable dollars.

6)    New Provisions. Among Rep. Price’s proposals not directly tied to Obamacare are an emphasis on health savings accounts to allow for tax-deductible contributions to special accounts reserved for healthcare expenses; new laws aimed at allowing insurers to sell their products across state lines; medical malpractice reform aimed at changing the burden of proof in malpractice cases; and various provisions allowing beneficiaries under public programs (Medicare, VA, etc.) to seek coverage in the private marketplace.

Empowering Patients contains scant mention of the ACA’s innovation models that have steered federal reimbursement away from fee-from-service and toward quality-based care. However, in September 2016, Rep. Price co-authored a letter to CMS challenging the agency’s authority to enact certain mandatory programs under its Center for Innovation.

As HHS Secretary, Price can impact health reform through the regulatory process, but legislation is ultimately required to replace Obamacare. Price’s detailed Empowering Patients proposal will likely provide a framework for Congressional Republicans as they draft an alternative to Obamacare in the coming months.

Disclaimer: The foregoing materials are provided for informational purposes only, and are not to be construed as legal advice. The information relies on limited authority and has not been screened or approved by any governmental agency. Please consult an attorney before applying this guidance to any particular facts or circumstances. 

Georgia Legislature Approves Modified Rural Health Tax Credit

After eleventh-hour negotiations in the General Assembly, Georgia's tax credit benefitting rural hospitals may become law after all. Georgia Health News reports that the credit, thought dead after the senate rejected the original version on March 14, was revived via Senate Bill 258 and passed after midnight Friday morning.

The bill grants to individuals and corporations a substantial tax credit for donating to rural hospitals that meet one or more of a few criteria, including critical access status. Under the bill, the Georgia Department of Community Health would maintain a list of eligible rural hospitals. The donor would be permitted to choose its recipient(s). 

For corporations, the tax credit would be 70 percent of the donation or 75 percent of the corporation’s income tax liability, whichever is less. For individuals and couples, the annual tax credits would be capped at $2,500 and $5,000 respectively. The new bill would take effect in earnest in tax year 2017. 

Detractors have challenged the bill as a stopgap measure that would distract from other rural health solutions such as expanding Medicaid. 

The bill now heads to the governor’s desk for final approval. Please contact us at 678-974-7707 for more information about the status of this bill. 

Disclaimer: The foregoing materials are provided for informational purposes only and are not to be construed as legal advice. The information relies on limited authority and has not been screened or approved by any governmental agency. Please consult an attorney before applying this guidance to any particular facts or circumstances. 

Florida hospitals get relief — but will still face deficit

The standoff between the state of Florida and the Obama administration was settled Thursday when Governor Rick Scott announced a dismissal of his suit against the administration in exchange for certain hospital funds that had been withheld. 

The lawsuit arose after CMS announced it would not renew Florida’s “Low-Income Pool” (LIP) funding, which aids safety net hospitals through a Section 1115 waiver and was set to expire on June 30. Florida had received about $1.3 billion annually through the waiver. 

Florida alleged the federal government was coercing the state into expanding Medicaid by withholding the funds. 

Under Thursday’s settlement, Florida will receive $1 billion in LIP funds for the 2015-16 budget year, slightly less than the state has received in the past. But, in 2016-17 CMS will reduce the funding to $600 million. No promises were to made as to subsequent years. 

While the settlement is a near-term victory for Florida, shortfalls await both providers and patients if the state does not expand Medicaid or take other action to offset the impending cuts. 

More Than a 'Doc Fix': a Look Inside MACRA for Hospitals, CHCs

As news outlets have widely reported, the U.S. Senate has followed the House in passing a measure to repeal Medicare’s payment formula, known as the Sustainable Growth Rate (SGR). The bill would replace the SGR formula with a new model tied to quality and value. This is another significant development in healthcare’s increasingly rapid shift toward alternative payment models. 

But the “doc fix” bill, titled the Medicare Access and CHIP Reauthorization Act (MACRA), contains numerous other items impacting health providers. Namely, the legislation offers much-needed (albeit short-term) breaks to hospitals and community health centers. These provisions include: 

• Two-Midnight Rule delayed six months: MACRA seeks to stall enforcement of CMS’s “two-midnight” rule until September 30. This rule changes the way Medicare pays hospital by limiting inpatient payments to hospital stays expected to last at least two nights. This extension will allow CMS to “assess provider understanding and compliance with the ‘two-midnight’ rule.” 

• Medicaid DSH cuts postponed: The Affordable Care Act’s cuts to Medicaid disproportionate share (DSH) payments would be further delayed under the bill. These cuts were to reduce federal subsidies to certain hospital serving a disproportionate number of uninsured patients. Perhaps due to many states’ declining to expand Medicaid under the ACA, the reductions have been postponed multiple times, and are now scheduled to begin in fiscal year 2018. 

• Community Health Centers receive extension: Unlike its cuts to DSH payments, the ACA offered a bonus to designated Community Health Centers. This federal funding was slated to expire this year, but MACRA would extend it through fiscal year 2017. The nation's 1,302 CHCs would share a fund of $3.6 billion annually under the law. 

President Obama is expected to pass the bill, which received bipartisan support. 

What does King v. Burwell mean for Georgia?

This week, the U.S. Supreme Court will hear oral arguments in King v. Burwell, the case that threatens to undo a critical element of the Affordable Care Act. The Court will consider whether the subsidies that have allowed many to purchase health insurance were legally awarded to consumers using the ACA's federally run exchanges, and whether those subsidies should now be taken away. 

The ACA called for federal health insurance exchanges to fill the void left by states choosing not establish their own exchanges. This void was larger than expected, as only 14 states opted to operate their own insurance exchanges. Consequently, 8.84 million Americans have signed up for insurance via the federally run exchange, HealthCare.gov. 

However, the provision calling for subsidies that would help make insurance affordable on the exchanges — the provision at issue in King — perhaps mistakenly limited those subsidies to “exchange[s] established by the state.” While other portions of the law suggest subsidies were intended to be available through state and federal exchanges, the challengers in King contend the law means what it says: subsidies are limited to state-run exchanges.

Georgia is one of the states that declined to establish an insurance exchange. Approximately 425,000 Georgians have purchased insurance through the federal exchange, 90 percent of whom receive subsidies. 

If the Supreme Court rules against the government in King, these half-million Georgians will lose their subsidies and face significantly heightened premiums. The effects of this change will likely be felt by anyone who holds private insurance in Georgia: unaffordable insurance means fewer insured, and fewer insured means higher premiums across the board. 

Such a ruling would reduce the financial support available to Georgians under the ACA to roughly zero, as the state has already rejected the law’s Medicaid expansion. From a practical standpoint, dismantling the law in such piecemeal fashion would continue to be highly problematic, given that much of the ACA would still impact Georgia. (For example, certain individuals and employers will still be mandated to purchase insurance.) 

The worst victim of this selective undoing of the ACA might be providers, as the law's reimbursement and disproportionate share cuts will remain in effect, but would not be offset by increased privately insured or Medicaid patients. Providers would also continue to bear the same amount of uncompensated care they did before the ACA. 

The Department of Health and Human Services has announced it is not pursuing a contingency plan in the event of an adverse ruling, though some Republican legislators have proposed alternatives to the law they have long maligned. The Court’s decision is expected in late June. 

Gov. Deal’s Rural Health Committee Proposes Telemedicine Endeavor, Backs CON Program

Governor Nathan Deal’s new rural health committee has revealed an ambitious program aimed at saving rural healthcare in Georgia. The Rural Health Stabilization Committee, created in March 2014, released a report Monday introducing a pilot program centered on hard-hit rural emergency departments. 

The program would use “hubs and spokes” — i.e. hospital hubs and off-site monitoring/diagnostics — in an effort to “ensure that each patient is being transported to the appropriate setting,” and “monitor chronically ill patients to help them avoid repeat trips to the hospital.” 

According to the report, the “spokes” would include telemedicine-equipped ambulances, school clinics (also relying heavily on telemedicine), smaller hospitals, and local physicians. The Committee’s stated goal in employing these off-site resources is “to prevent the over-utilization of the ED as a primary care access point.”

The Committee requested $3 million for implementation of the program, which would be piloted at four hospitals serving different rural areas.

CON Support

The Committee’s report also contained a formal recommendation in support of Georgia’s Certificate of Need (“CON”) program. This program has often been the subject of legislative debate, but the Committee firmly endorsed the CON process for its role in maintaining and protecting rural hospitals. 

Freestanding EDs No More?

While Monday’s report served primarily to advance the Rural Health Stabilization Committee’s first major project, it also marked a setback for an earlier initiative brought before the Committee. Last year the Committee considered a proposal by the Department of Community Health to facilitate the establishment of freestanding emergency departments in rural areas. While the rules governing such freestanding EDs remain in effect, the Committee’s report all but recalled the program, stating that reimbursement issues made it financially unworkable. 

Medicaid Expansion a Non-Starter

One way of immediately benefiting rural healthcare in Georgia was conspicuously absent from the committee’s report: the Affordable Care Act’s Medicaid expansion. Georgia Health News reports that Gov. Deal has never considered the Medicaid expansion a realistic outcome of the Committee.