Funding, Pay-for-Performance Issues Raised

New developments in health care reform have been underway in Washington, D.C. since the spring recess, including congressional votes defunding the Patient Protection and Affordable Care Act (PPACA); Department of Health and Human Services (HHS) progress on implementing health care delivery system reforms; Treasury Department request for information on an employer mandate; and, new information informing the establishment of essential health benefits under the new health care law.

Congressional votes

The House of Representatives passed legislation May 3 that would block mandatory funding intended to assist states in establishing state-based health insurances exchanges. With the support of five Democrats, the bill passed 238-183. The White House has threatened to veto the bill should it pass the Senate, which is unlikely that it will even be considered. Exchanges are not scheduled to be up-and-running until 2014; however, in order to meet that deadline, state legislatures must begin taking steps this year toward their development unless they intend to defer to the federal government to set up an exchange in their state.

The House is scheduled to vote on two other defunding bills May 4, including measures to eliminate funding for school-based health centers and to expand the federal ban on using taxpayer funds to cover abortions.

Delivery System Reform

HHS and the Centers for Medicare and Medicaid (CMS) recently issued new rules implementing Medicare delivery system reforms for hospitals in accordance with PPACA. The new pay-for-performance initiative – the Hospital Value-Based Purchasing Program – is designed to improve health care quality and lower the cost of health care. CMS will distribute an estimated $850 million to hospitals based on their overall performance on a set of quality measures that have been linked to improved clinical processes of care and patient satisfaction.

NSBA has supported delivery system reform initiatives and encouraged a systemic shift in health care reimbursement policy away from paying doctors and hospitals based on the number of procedures performed. Throughout the health care reform debate, NSBA urged lawmakers to pursue reforms that paid health care providers and facilities based on quality and outcomes in order to lower the costs of health care for small businesses, their families, and their employees.

IRS Seeks Information on Employer Mandate

PPACA’s free-rider provision requires employers with more than 50 employees provide health coverage to their employees or pay a penalty. (There are nuances to the requirement – click here to read more about how it is intended to work.) The Treasury Department recently issued a request for information to the public to gain feedback on defining full-time employees. The law states that full-time employees are those that work 30 hours a week; however, Treasury is interested in feedback on how far employers must look back to determine if employees are meeting that 30 hour average. NSBA is currently considering the request.


Click here for more information on full-time employees from NSBA. Click here to read the Treasury Department request.


Essential Health Benefits Package Update

The essential health benefits package is the benchmark set in the Affordable Care Act to meet the individual mandate and employer free-rider provision (for those employers with more than 50 employees), and will be the basis for what is provided by health plans in the exchanges. The provision establishing the essential health benefits package is vague in statute and left to the Department of Health and Human Resources (HHS) to define. HHS charged the Institute of Medicine (IOM) to provide guidance on policy principles and criteria in developing the package. Additionally, the Department of Labor (DOL) was charged to provide IOM with a report of the benefits in a “typical employer plan” to inform the IOM process.

The DOL report, “Selected Medical Benefits: A Report from the Department of Labor to the Department of Health and Human Services,” provides information on employer-provided health plans in the private sector, drawing on data from the DOL’s Bureau of Labor Statistics’ National Compensation Survey.

NSBA has expressed concerns about the data in the DOL report since it looks primarily at large employer benefits, providing an inaccurate picture of a typical small employer health plan. If HHS were to adopt the DOL report models for the essential health benefits plan, then most small businesses would be required to “buy-up” in 2014. This represents a real problem for small businesses and their employees who have been struggling with the costs of health care for years.

The IOM has its next and last meeting in June and their report is due in September. HHS is expected to release draft regulations for public comment on the essential health benefits package in the fall of 2011. NSBA has been engaged with the IOM, DOL, and HHS process all along with the goal of ensuring that the essential health benefits package will be affordable for small businesses and their employees.

NSBA will continue to monitor health care reform initiatives in Congress and elsewhere to advocate and ensure progress is made to benefit small business owners, their employees, and their families. Stay tuned to NSBA’s Web site and NSBA’s Health Reform Today and Tomorrow Web site for more news and information as it is made available.

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