Washington Extension

December 2, 2011

Medicare News

Enrollment in Medicare Advantage plans grew 6 percent from 2010-2011, according to a new report by the Government Accountability Office, despite federal payments that were frozen from 2010 to 2011. Average plan premiums declined 14 percent over the same period, from $28 per month to $24, and plan benefit packages remained stable. Medicare Advantage plan payment cuts scheduled to be implemented in coming years are expected to reduce plan enrollment and lead to less generous benefit packages.

CMS Principal Deputy Administrator and former Virginia Secretary of HHS Marilyn Tavenner has been tapped by the White House to lead CMS after current Administrator Don Berwick steps down on December 2nd. Berwick was never confirmed by the Senate, instead serving under a recess appointment that expires on December 31st, 2011. Health groups, including hospitals, physicians and nursing homes, expressed support for Tavenner’s confirmation to the post. House Majority Leader Eric Cantor has also thrown his support behind the President’s nominee, though Tavenner must still be confirmed by the Senate.

ACA Update

CGI Federal Inc. was awarded a contract worth up to $93.7 million to build the ACA’s federal health insurance exchange. CGI will work with the Center for Consumer Information and Insurance Oversight in HHS to implement a health insurance exchange that will serve consumers in states without access to a state-based health insurance exchange.

Another round of federal funding for health insurance exchange establishment totaling nearly $220 million was awarded to 13 states, seven of which are currently involved in the lawsuit challenging the constitutionality of the ACA. Twelve of the grants are Level 1 grants, which don’t require states to commit to establishing an exchange, and 28 states have received so far (most recently AL, AZ, DE, HI, ID, IA, ME, MI, NE, NM, TN and VT). Rhode Island received the first Level II grant, which requires an exchange commitment, to further develop its IT infrastructure.

The National Association of Insurance Commissioners passed a resolution (pdf) calling on HHS to “consider” bills that exempt insurance agents’ commissions from federal standards that cap insurers’ administrative costs. Though significant disagreement exists within the NAIC, the vote reflects concern about preserving consumer access to insurance agents and brokers as new minimum Medical Loss Ratio standards are implemented.

Employers may be able to dump their sickest employees onto health insurance exchanges, while preserving employer-based health insurance for healthier employees, a new report finds. Self-insured employers could design their health plan with limited provider networks, or high deductibles or copayments, to encourage higher-cost employees to leave the plan and purchase insurance through exchanges. An influx of sicker individuals into health insurance exchanges could negatively affect the risk pool. Experts disagree whether the financial advantage of this approach would trump the inevitably bad public relations for employers.

On the Hill

Due to the “super committee’s” failure to propose a deficit reduction plan, mandatory budget cuts are slated to be implemented in 2013 for defense and nondefense spending through automatic changes to budget authority, known as sequestration. This would result in reductions of 2 percent each year in most Medicare spending, or savings (pdf) of approximately $123 billion over 10 years, according to the Congressional Budget Office. Lawmakers from both parties on Capitol Hill have proposed amending the automatic budget cuts, but President Obama has threatened to veto any efforts to undermine sequestration.

With the collapse of the “super committee”, Congress has just until the end of 2011 to pass legislation preventing a nearly 30 percent cut to physician payments under Medicare, and extend various other Medicare payment policies that are subject to near-annual “fixes” to prevent implementation of current law. Staving off Medicare physician payments for just one year will cost approximately $22 billion.

Responding to a request from Senator Tom Coburn (R-OK), the Congressional Research Service refutes the claim of some Republican Presidential nominees that the ACA could be undone by Presidential executive order. CRS finds that a President “would not appear” to be able to issue an executive order preventing an agency from promulgating a rule that is statutorily required by the ACA because it would directly conflict with an explicit congressional mandate. Executive orders directing an agency to take a particular action on a mandatory program for which the agency has discretion may be permissible.

Visit Extend Health — the nation’s largest private Medicare exchange.

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