On March 21st, the House of Representatives voted 219-212 to approve the “Patient Protection and Affordable Care Act (PPACA).”  Identical legislation was passed by the Senate on December 24, 2009.  President Obama signed the comprehensive reform bill into law on March 23, 2010.

As of this writing, the Senate was debating a “reconciliation” bill that would revise or eliminate a select number of provisions in PPACA.   The reconciliation bill, which has already been approved by the House, was necessary to secure the support of a majority of House Democrats for PPACA.  This legislation cannot be filibustered and requires only a simply majority (51 votes) to pass. It is expected to be approved and signed into law.

PPACA and the reconciliation bill will institute sweeping reforms impacting Medicare, Medicaid and the private health insurance market.  According to the Congressional Budget Office the legislation will cost $940 billion over 10 years and provide coverage to 32 million Americans currently uninsured.  Starting in 2014, the legislation requires guarantee issue and renewability of coverage and allows rating variation based only on age, rating area, family composition, and tobacco use.

There will be no government-run “public option” as a result of the legislation.  Instead, each state will be required by 2014 to establish an “American Health Benefit Exchange” and a “Small Business Health Options Program.” These will be marketplaces where insurance companies can offer plans to individuals and small businesses.  Subsidies will be made available to low-income individuals to assist with the purchase of coverage via the exchanges.  Tax credits will be offered to small business to assist in providing coverage to employees.   Penalties will be enforced on individuals who fail to purchase coverage and on small businesses that fail to offer coverage.

Here is a summary of the implementation timeline, followed by items of particular interest to the NMF, Marfan syndrome patients, and the medical/industrial community.

90 Days After Enactment

• Establishes high-risk pools for people with pre-existing conditions who have been uninsured for at least six months.

Six Months After Enactment

• Prohibits insurers from rescinding policies once a beneficiary become sick.
• Prohibits insurers from denying coverage to children (up to age 19) who have a pre-existing condition.
• Prohibits insurers from imposing lifetime benefit caps.
• Requires insurers to allow young adults to stay on their parents’ policy until age 26.

2011

• Requires individual and small group market insurance plans to spend 80% of premium dollars on medical services.
• Large group plans would have to spend a minimum of 85%.  If carriers fall below these percentages they will have to rebate the difference to policyholders.
• Begins the process of closing the Medicare Prescription Drug Program “Donut Hole.”  Beneficiaries will receive a 50% discount on brand name drugs in the coverage gap.
• Establishes a national, voluntary insurance program for purchasing community living assistance services (CLASS program). Following a five-year vesting period, the program will provide individuals with functional limitations a cash benefit of not less than an average of $50 per day to purchase non-medical services and supports necessary to maintain community residence. The program is financed through voluntary payroll deductions: all working adults will be automatically enrolled in the program, unless they choose to opt-out.

2014

• Requires states to establish health insurance exchanges for individuals and small businesses.
• Establishes subsidies for low income families to purchase coverage through the exchanges. Households making up to four times the federal poverty level, $88,200 for a family of four, will be eligible. Premiums for a family of four making $44,000 would be capped at approximately 6 percent of income.
• Requires employers with 50 or more employees to provide coverage or face penalties.
• Requires most individuals to obtain coverage or face penalties.
• Eliminates pre-existing coverage exclusions for adults.
• Prohibits annual benefit caps.
• Provides guaranteed issue and renewability of coverage for small group and individual plans.
• Allows premium rating variation based only on age, rating area, family composition, and tobacco use.
• Prohibits waiting periods of greater than 90 days for coverage to begin.

2018

• Establishes an excise tax on high-cost employer-sponsored health coverage. The threshold taxable amounts are $10,200 for single coverage and $27,500 for family coverage.  Stand-alone dental and vision plans are excluded from the total value of the benefit package subject to the new tax.

In addition to these reforms, the legislation also includes the following provisions of interest to the NMF patient, medical and industry community:

• Requires insurance coverage of routine patient care costs associated with clinical trials.
• Reduces or eliminates beneficiary cost sharing for preventive screenings and services in both private and public plans.
• Requires enhanced disclosure of the financial relationships pharmaceutical manufacturers and distributors have with healthcare providers and non-profit organizations.
• Expands federal support for Comparative Effectiveness Research by creating a “Patient-Centered Outcomes Research Institute.”  Findings derived from CER research cannot be used as guidelines for treatment, coverage or reimbursement.
• Establishes an approval pathway at the Food and Drug Administration for generic biologics (with 12 years of exclusivity for the innovator product).
• Increases the Medicaid Drug Rebate paid by manufacturers from 15.1% to 23.1% of the Average Manufacturer’s Price for brand name drugs.
• Imposes new fees and taxes on the pharmaceutical, health insurance and medical device industries:
  • The annual fee for brand name pharmaceutical manufacturers begins in 2011 and totals $28 billion over 10 years.  The aggregate amounts for the industry are as follows;  $2.5 billion in 2011; $2.8 billion annually from 2012-2013; $3.0 billion annually from 2014-2016; $4 billion in 2017; $4.1 billion in  2018; and $2.8 billion in 2019 and thereafter.
    • An individual manufacturers share of the fee will be based on its market share of sales to federal health programs; Medicare, Medicaid, VA, etc.   Sales of orphan drugs that benefitted from the orphan drug tax credit will be excluded from a company’s marketshare calculation.
  • The excise tax on medical devices begins in 2014 and will generate $20 billion. It is a 2.3% tax imposed on sales of all medical devices except retail purchases by the public intended for individual use.
• Expands the 340B Drug Discount Program to the outpatient settings of qualifying children's hospitals, free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals.
• Requires manufacturers to offer pharmaceuticals for sale to 340B entities.
• Requires the Government Accountability Office to issue a report to Congress on whether individuals served by 340B entities are receiving optimal health care services.  The report will also review whether……
  • The 340B  program should be expanded given that uninsured individuals will have greater access to health care coverage once the reform legislation is implemented;
  • Mandatory sales of certain products covered by the 340B program could hinder patient access to those therapies through any provider; an
  • 340B income is being used by 340B covered entities to further program objectives.
• Establishes a Center for Medicare and Medicaid Innovation to test innovative coverage models based on Institute of Medicine recommendations.
• Establishes an Independent Medicare Payment Advisory Board. This 15 member panel of physicians and healthcare financing experts will be chosen by the President and confirmed by the Senate.  The Advisory Board will propose changes to Medicare aimed at bringing the entitlement program in line with reduction targets. Congress cannot modify or filibuster the Advisory Board’s proposals.  A supermajority vote of the House and Senate will be required to reject the panel’s recommendations.  If rejected, Congress then will be required to find alternative ways to save the same amount of money.
• Establishes a new Medicare reimbursement benefit for pharmacists who offer Medication Therapy Management services.
• Reduces reimbursement for Medicare Advantage plans by $200 billion over 10 years.
• Increases funding for Community Health Centers by $11 million over the next 5 years.
• Establishes new federal initiatives to reduce waste, fraud, and abuse in Medicare and Medicaid including; expanded provider screening, greater oversight of providers and suppliers, enrollment moratoria in areas identified as being at elevated risk of fraud, and increased penalties for submitting false claims.
• Reduces Medicare payments to Disproportionate Share Hospitals starting in 2014 to reflect lower uncompensated costs due to the expansion of health coverage.