Federal Update

This was a week for more news about what the White House and the rest of the Obama Administration knew and when they knew it in the run-up to the launch of HealthCare.gov. The latest revelations showed that despite their claim that they could not have anticipated the scope of problems that came with the launch of HealthCare.gov, there were some glaring signs of trouble.

On Tuesday, Centers for Medicare & Medicaid Services (CMS) Deputy Chief Information Officer Henry Chao was called before the House Energy and Commerce Subcommittee on Oversight and Investigations for a hearing on data security on the exchange. After laying out the protections in place for data provided to the exchange, Chao was asked how much of the site remained to be completed. His answer, that somewhere between 30 and 40 percent of the broader system to support exchanges were still under construction unleashed a wave of fresh questions from incredulous members. Chao explained that the incomplete portions involved what he called “back office functions,” including the payment of tax credit subsidies to insurers and systems to reconcile enrollment records between CMS and insurers. According to Chao, those systems will not be used until early 2014.

Another line of questioning at Tuesday’s hearing focused on a memo released by the committee that warned of many of the difficulties that the website eventually faced following its October 1 launch. The report, drafted by consulting firm McKinsey and Company, said that development of the federal exchange was being hampered by a lack of centralized leadership from HHS and the resultant confusion among the various private sector contractors working on the site. Despite confirmation that high-ranking administration officials had been briefed on the report, Chao told legislators he had never seen it.

Separately this week, House Government Reform and Oversight Committee Chairman Darrell Issa (R-CA) released an email chain from late September that showed CMS and the lead contractor for the site considering the optics of the error message that users would see if there were difficulties logging into the exchange once it launched. Chao presciently worried that the media would seize on the messages, "taking screenshots…and just ramping up the hyperbole about HC.gov not (being) functional."

CMS did have some progress to report on its “punch list” of fixes required to HealthCare.gov. In a series of briefings this week, Director of Communications Julie Bataille said that most of the glitches that had prevented transmission of enrollment information from the site to insurers (so-called 834 transmissions) had been addressed. She also said that most individuals should now be able to enroll in plans directly through an insurer, including those eligible for premium tax credits. However, even these improvements were clouded by word from CMS that the site had been inoperable for three hours on Wednesday afternoon and 10-15 minutes on Tuesday.

Finally, CMS announced that the deadline to enroll in health coverage to go into effect on January 1 has been pushed back from December 15 to December 23. Bataille cited difficulties people have had in signing up for coverage as well as concerns over cancellation notices as the driving factors behind pushing the deadline back. Insurers may struggle with the new deadline; Robert Zirkelbach, spokesman for America's Health Insurance Plans, said that the delay "makes it more challenging to process enrollments in time for coverage to begin on Jan. 1."

States Deciding on Administrative Fix to Extend Plans

Several states indicated throughout the week whether or not they will implement the administrative fix that President Obama announced last week. The fix would allow insurers to renew their current policies for current enrollees without adopting the 2014 market rule changes. According to the New York Times, fourteen states including California, Connecticut, Indiana, Massachusetts, Maryland, Minnesota, Nebraska, New York, Oklahoma, Rhode Island, Vermont, Washington, West Virginia, and Wisconsin have refused to allow late renewals. Twenty states, including Arkansas, Delaware, Georgia, Florida, Hawaii, Kansas, Kentucky, Michigan, Mississippi, Missouri, New Hampshire, North Carolina, North Dakota, Ohio, Oregon, South Carolina, Tennessee, Texas, Utah, and Wyoming will allow late renewals. Other states are still in the process of deciding whether or not to allow late renewals.

CMS Provides Guidance on Extending Policies Slated to Have Been Cancelled

CMS released a bulletin this week providing insurers with boilerplate language to send customers whose plans were extended under President Obama’s announcement last week. The policy change, if approved by state regulators, allows carriers to extend their plans that do not comply with the new standards set under the Affordable Care Act into 2014. The notices from the insurers must specify the provisions of the ACA that may not apply to the extended policies, including restrictions on rating, guaranteed availability and renewability, treatment of pre-existing conditions, essential health benefits and out-of-pocket limits.

The memo was issued by Gary Cohen, director of the Center for Consumer Information and Insurance Oversight on Thursday. Cohen made news earlier in the week for his testimony before the Senate Small Business Committee. Asked by Senator Ron Johnson (R-WI) whether President Obama’s oft-repeated promise that if individuals liked their plan they could keep it was true or false, Cohen said that the ACA had provided a mechanism for plans to grandfather their policies and the refusal of insurance companies to meet the grandfathering terms was their own choice.

Senate Finance Committee to Mark Up Sustainable Growth Rate Proposal

The Senate Finance Committee announced that it will mark up legislation to replace the Medicare Sustainable Growth Rate (SGR) on December 12. The proposed repeal includes a 10 year freeze in fee-for-service reimbursement rates and creates a pay for performance program. The overall cost of the “doc fix” is estimated at $140 billion over 10 years. 

Health Law Polling Reveals Continued Decline in Support

A pair of new polls released this week reinforced the concerns of ACA supporters that the public is souring on the law, and the underlying concept of a strong role for the federal government in ensuring health coverage. The Kaiser Family Foundation, which has been tracking public opinion about the ACA since its passage found in its November poll that the gap between those approving of the law (33 percent) and those disapproving (49 percent) is greater than it has been since 2011, when the law was a central topic of derision among GOP candidates campaigning for the party’s presidential nomination. Support among Democrats in the poll fell an astounding 15 percent, from October’s 70 percent approval level. Perhaps most surprisingly, the survey found that 71 percent of the uninsured had heard “nothing at all” or “only a little” about the new exchanges. While down from 84 percent in September, it still reflects a massive disconnect between the marketplaces and their primary targets.

In what is likely a related development, the number of people who believe that the federal government should make sure that all Americans have health coverage reached an all-time low in the nearly 15 years that Gallup has been polling the question. According to their annual Health and Healthcare poll, only 42 percent hold that view currently, down from a peak of 69 percent in 2006. Support for the position has eroded steadily from there. Driving the decline is a verging-on-unanimous view among Republicans (86 percent) that the federal government is not responsible for ensuring universal coverage, and a doubling for that sentiment, from 27 percent to 55 percent, among Independents.

Compounding Pharmacy Legislation On Its Way to President’s Desk

A bill that would impose strict new regulations on the compounding pharmacy industry and establish a system for the tracking of all pharmaceutical products passed the Senate yesterday by unanimous consent and heads now to the President's desk. The Drug Quality and Security Act (HR 3204) would define pharmacies that do large-scale compounding without individual prescriptions as “outsourcing facilities” and subject these facilities to strict new regulation by the Food and Drug Administration. It would also put the nation on a path to develop an electronic, interoperable product tracing system for pharmaceuticals, including establishment of nationwide drug serial numbers within four years of enactment. While there are a patchwork of drug tracing regulations in place across the states, this would be the first federally-operated system.

The legislation came together in the wake of a meningitis outbreak traced back to a compounding facility in Framingham, Massachusetts that killed more than 60 individuals last year, as well as regular reports of counterfeit pharmaceuticals being sold internationally. Industry opponents said the bill would create additional layers of bureaucracy without any difficulty for patients seeking compounded pharmaceuticals while making meaningful progress toward preventing future outbreaks. The President is expected to sign the bill into law as soon as Friday.

Finally, in observance of next week's Thanksgiving holiday, your next edition of the Weekly Health Care Wrap-Up will occur on Friday December 6. Happy Thanksgiving!

From the States

A complete roundup of this week’s exchange action in the states is available through our State of the States: Health Insurance Exchanges publication here.

Alaska. Governor Sean Parnell (R) formally announced on Friday that the state would not be partaking in the Medicaid expansion authorized under the ACA. Although some business and health care interests, including the state’s Chamber of Commerce, had urged the state to move forward with expansion, the decision was not a surprise. Parnell had previously rejected an attempt to establish a state-run insurance exchange in Alaska, and has been a vocal critic of the ACA. The Governor has appointed a Medicaid Reform Taskforce that is due to report cost-saving recommendations next year.Maine. Despite having previously vetoed a Democratic plan to expand Medicaid as allowed under the ACA, Governor Paul LePage (R) announced this week that his administration had contracted for a $1 million study on reform of the state’s social services programs, including whether to partake in the federally-funded expansion. The contract is with a firm operated by Gary Alexander, the former Medicaid commissioner in Rhode Island who led that state’s negotiations of a global Medicaid waiver that provided significant programmatic flexibility in exchange for a cap on overall federal spending.

New Hampshire. Efforts to expand Medicaid in New Hampshire failed when the Senate could not pass the House’s Medicaid expansion bill. In the wake of the Legislature being unable to pass a Medicaid expansion bill, Governor Maggie Hassan said she would continue to push for an expansion during the next legislative session.

Texas. Lt. Governor David Dewhurst, a leading Republican and the presiding officer of the Texas state senate, publicly urged the Texas Department of Insurance to maintain the state’s high-risk pool alive beyond its planned termination on January 1. Like most states, Texas was closing its pool because provisions in the ACA that prohibit insurers from denying coverage due to pre-existing conditions or varying premiums beyond certain levels based on health status will go into effect in 2014. However, Dewhurst claims, the problems experienced by those trying to purchase insurance through the federal insurance exchange threaten to leave some high-risk individuals without coverage.

Virginia. With a new governor expected to make the expansion of Medicaid a top priority, a Republican state senator has refiled legislation that would establish a state health insurance exchange within the Virginia Corporation Commission. Senator John Watkins said he believes that having a state-run marketplace would have saved the aggravation that many Virginians are experiencing in trying to gain coverage through HealthCare.gov. The exchange proposal, and Governor-elect Terry McAuliffe’s Medicaid plan, are expected to face steep challenges in the Republican-controlled House of Delegates.

Washington, DC. Insurance Commissioner William White was abruptly removed from his post last Friday, a day after he had issued a statement critical of the Obama Administration’s proposal to allow insurers to continue to offer plans that did not meet the minimum requirements of the Affordable Care Act. White’s contention that waiving these requirements would damage the viability of fledgling health insurance exchanges was echoed by several of his counterparts in other states and the National Association of Insurance Commissioners.

Calendar: Looking Ahead

The House is out of session until December 2; The Senate is out until December 9.

Note: The House and Senate have now each released their preliminary schedules for 2014.

Monday November 25

  • The House Oversight and Government Reform Committee holds a field hearing titled "Obamacare Implementation: High Costs, Few Choices for Rural America," in Gainesville, GA.