Straight talk on health care reform: January 1 a milestone date

On Jan. 1, eleven provisions of the Patient Protection and Affordable Care Act – that is, the national health care reform law – will go into effect.

These provisions will place new limitations on the ability of health plans to increase premium rates, help close the Medicare Part D "donut hole," improve primary care for older Americans and create more affordable opportunities for seniors to take advantage of prevention and wellness programs. Other provisions provide a new voluntary program for community-based long-term care insurance, create programs to improve value and services in Medicaid, and create new opportunities for health care innovation and quality. Finally, the new law introduces some methods for funding these and other reforms.

Minimum medical loss ratios for health insurers
Health plans will be required to report the percentage of every premium dollar spent on clinical services and ensuring clinical quality for plan year 2010. If plans spend below a certain amount (85 percent for the large-group market and 80 percent for the individual and small-group markets), those health plans will be required to provide rebates to consumers.

Closing the Medicare Part D ‘donut hole'
Pharmaceutical manufacturers will be required to provide a 50 percent discount on brand-name prescriptions filled in the Medicare Part D "donut hole."

Medicare bonus payments for primary care
From Jan. 1, 2011, through Dec. 31, 2015, the law provides a 10 percent bonus payment to health care providers for Medicare primary-care services. An additional 10 percent bonus payment will be provided to general surgeons practicing in areas that have a shortage of health care professionals.

Prevention and wellness benefits
The law authorizes Medicare coverage for preventive care and wellness planning, including a comprehensive health risk assessment. It will establish a cost-sharing program for many Medicare-covered preventive services. The law also waives the Medicare deductible payment for colorectal cancer screening.

Voluntary long-term community-living insurance
The law will establish a voluntary insurance program for purchasing long-term community-living assistance services and supports, also known as the "CLASS Program." This will provide up to $50 daily to help individuals purchase non-medical services necessary to maintain a community residence. The program is financed through voluntary payroll deductions; unless they choose to opt out, all working adults will be enrolled in the program.

Medical ‘homes' for Medicaid
The Patient Protection and Affordable Care Act will create a new state option that will allow some Medicaid beneficiaries to identify a provider as a "health home." Under a health home, a patient chooses a physician who then leads a medical team that manages care ranging from specialists to pharmacists; such programs are designed to engage patients in their own care and have been found to provide optimal health care. States that take up the option will receive 90 percent federal matching funds for two years to finance the program.

Medicaid chronic-disease prevention
The new law provides a three-year grant to states to develop programs that encourage Medicaid enrollees to participate in lifestyle-improvement programs and to meet health-behavior goals.

Innovation and health care quality
The law creates a Center for Medicare and Medicaid Innovation to test payment and delivery system models. These models must reduce costs while either maintaining or improving quality. The secretary of the Department of Health and Human Service is required to deliver a national strategy for the improvement of health care quality to Congress on Jan. 1.

Medicare premiums for higher-income individuals and couples
In order to fund some of the previously mentioned benefits, income thresholds for Medicare Part B premiums will be frozen at 2010 levels for eight years. This will result in more beneficiaries paying income-related premiums. Also, the Medicare Part D premium subsidy will be reduced for individuals with incomes above $85,000 and couples making more than $170,000.

Changes to payments for Medicare Advantage plans
Medicare Advantage plan payments will be restructured by phasing in payments at progressively smaller percentages. Medicare Advantage private plans are paid 12 percent more on average than traditional Medicare, and these plans accounted for about $11 billion in Medicare spending in 2009. Current payment percentages will be frozen at 2010 levels, and the law will generally prohibit Medicare Advantage plans from higher cost-sharing requirements than currently allowed under regular Medicare.

Changes to tax-free savings accounts
The law will exclude reimbursement for over-the-counter drugs through a Health Reimbursement Account (HRA), Flexible Spending Account (FSA), or on a tax-free basis via a Health Savings Account (HSA) or an Archer Medical Savings Account (MSA). The law also increases the tax on distributions from HSA or Archer MSA that are not used for qualified medical expenses to 20 percent of the amount used.

Source: Kaiser Family Foundation: Health Reform Source, Implementation Timeline