The Affordable Care Act: What Lies Ahead

It goes without saying — piloting the Affordable Care Act (ACA) is challenging. To provide some direction, MAFP has compiled the following timeline and brief summary of some of the ACA’s main provisions that have gone into effect or are set to go into effect between 2013 and 2015. This timeline is subject to change. Should you have questions about any of the information below, please contact MAFP Director of Government Affairs Christin Nohner at cnohner@mafp.com or 517.664.9082.

2013

January 1, 2013
Medicaid Payments Increase for Primary Care Physicians

As part of the ACA, the federal government will fully finance the difference between the state Medicaid reimbursement rate and the current year Medicare rate for the years 2013 and 2014 for eligible primary care physicians. Only certain evaluation and management (E&M) codes and vaccinations codes apply. While Michigan began paying enhanced rates for fee-for-service, there has been a delay in increasing payments for the managed care population. However, all payments will be retroactive to January 1, 2013.

August 1, 2013
Pharmaceutical Manufacturing Companies and Distributors Required to Report Financial Transactions with Physicians under the Physician Payments Sunshine Act

Manufacturers and distributors of drug, medical devices, supplies, and biologicals that supply at least one product covered under Medicaid, Medicare, and/or the Children’s Health Insurance Program (CHIP) must report financial transactions that occur between the manufacturer and a physician to the Centers for Medicare and Medicaid Services (CMS). For more information on the Physicians Payments Sunshine Act, click here.

October 1, 2013
Health Insurance Exchanges Go Live

Individuals and small businesses are able to shop for health insurance plans on either a federally-run, state-run, or partnership exchange, depending on which state they live in. [Recall that Michigan has a federal-facilitated exchange so the federal government will retain much of the responsibilities of administering the functions of the marketplace, including approval, implementation, and oversight of the health plans offered on the exchange, as well as setting parameters for cost-sharing requirements.] Thirteen health insurance companies have been certified to offer plans on the exchange.

Disproportionate Share Hospital Payments to Treat Uninsured Individuals Reduced

Under Medicare, disproportionate share hospital (DSH) payments will be initially reduced 75 percent with subsequent adjustments based on the percent of the uninsured population and the amount of uncompensated care that is provided. Medicaid DSH payments will also be reduced, and the reduction will be distributed under a methodology adopted by the Secretary of the U.S. Department of Health and Human Services (HHS).


2014

January 1, 2014
Mandate for Individual Health Insurance Coverage Goes into Effect

Most U.S. citizens and legal residents will be required to obtain health insurance coverage or pay a penalty, which will increase substantially between 2014 to 2016—$95 in 2014; $325 in 2015; and $695 in 2016. After 2016, dollar amounts will be indexed. Certain individuals would be exempt from the individual mandate and thus will not be subject to a penalty, including individuals who have certain qualifying religious reasons, those who do not meet the threshold for filing federal income taxes, and those whose cost-sharing requirements would exceed 8 percent of their income.

Medicaid Eligibility Expanded

States that have chosen to participate in Medicaid expansion will receive 100 percent federal funding for three years (through 2017). Coverage will be expanded to eligible adults with incomes at or below 133 percent of the federal poverty level (FPL). Although Michigan approved Medicaid expansion, the legislature delayed implementation; therefore, it is likely that eligible Michiganders will not be able to receive benefits until the end of March 2014, at the earliest.

Health Insurance Exchange Plans Provide Coverage, Offer Tax Credits

Individuals who enrolled in a plan offered on the exchange prior to December 15, 2013, should begin to see their benefits by January 1, 2014. Eligibility and enrollment will be coordinated across Medicaid, CHIP, and the new marketplaces. Eligible individuals between 100 percent and 400 percent of the FPL will receive refundable, advanced tax credits and cost-sharing subsidies. [Those under 250 percent of the FPL will be eligible for cost-sharing subsidies, while premium subsidies will be available for those between 133 percent and 400 percent of FPL.]

Insurance Market Reforms

The following insurance market reforms will be in effect on January 1, 2014:

  • Plans must cover individuals regardless of health status—a requirement known as “guaranteed issue.”
  • Rating variation will be limited to age, geographic area, family, and tobacco use for plans offered in the individual and the small group markets on the health insurance exchanges.
  • Insurance plans can no longer impose annual dollar limits on beneficiaries.
  • Plans offered on the exchanges and in the individual and small group markets must, at a minimum, offer a benefit package that includes “Essential Health Benefits” as defined by HHS, which can be found on www.HealthCare.gov.
  • Certain health insurance providers will be subject to annual fees.
March 31, 2014
CMS Disseminates Data under the Physician Payments Sunshine Act

Beginning March 31, 2014, CMS will disseminate the data on financial transfers collected from pharmaceutical drug manufacturers, distributors, and other mandated entities to affect parties. Physicians will have 45 days to dispute any reported information they find to be inaccurate, false, or misleading.

April 30, 2014 (no later than)
First Independent Payment Advisory Board Recommendations Due

The Independent Payment Advisory Board (IPAB) – a 15-person board appointed by the President and confirmed by the Senate – will be tasked with submitting recommendations on cost-containment measures to reduce Medicare spending if CMS actuaries determine spending exceeds certain targeted growth rates.

September 30, 2014
CMS Releases Data to Public under the Physician Payments Sunshine Act

All financial transactions reported to CMS will be released to the public under the National Physicians Payment Transparency Program (NPPTP), allowing consumers direct access to all 2013 records. Subsequent records will be released on an annual basis.


2015

January 1, 2015
Mandate for Employer Health Insurance Coverage Goes into Effect (Partially)

Employers with 100 employees or more will need to insure at least 70 percent of their full-time workers. This provision was originally set to go into effect January 1, 2014; however, it was delayed for one year.

October 1, 2015
Federal Matching Rate for the Children's Health Insurance Program Increases

Federal matching funds for the CHIP will increase 23 percent, up to a cap of 100 percent.

2015
Medicare Payments under Physician Quality Reporting System Reduced

The Physician Quality Reporting System (PQRS) was implemented under the Tax Relief and Health Care Act of 2006 in an effort to reward quality improvement measures. Under the ACA, physicians who choose not to participate in PQRS, or physicians who are found to be unsuccessful at the end of 2013, will be subject to a penalty of a 1.5 percent reduction in Medicare payments beginning in 2015 and 2 percent in subsequent years.


2016

January 1, 2016
Mandate for Employer Health Insurance Coverage is Fully Implemented

Employers with 100 or more employees will need insure at least 95 percent of their full-time workers. Employers with 50-99 will also be required to start insuring full-time workers. In general, employers will be assessed a fee of $2,000 per employee (minus the first 30 full-time employees) if they fail to provide health insurance coverage for their employees.

January 1, 2016
Health Care Choice Compacts Permitted

In 2016, states may choose to form a health care compact to allow insurance companies to sell plans across state lines.


2020

2020
Cadillac Tax Implemented

The law will impose a 40 percent excise tax on insurers of employer-sponsored health plans with aggregate expenses that exceed $10,200 for individual coverage and $27,500 for family coverage. Originally set to take effect in 2018, the tax was delayed for two years under a provision included in the Fiscal Year 2016 Omnibus Appropriations Bill.

2020
Donut Hole Prescription Drug Gap Coverage Ends

Under current law, Medicare discontinues coverage of drug costs after a plan and beneficiary has spent more than $2,830 on prescription drugs. It starts paying again after an individual’s out-of-pocket expenses exceed $4550. The hole will close in 2020.

Medicare beneficiaries will continue to pay the 25 percent of drug costs until they reach the threshold for Medicare catastrophic coverage, when their copayments drop to 5 percent.