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Regulatory Roundup

The federal government was abuzz recently with regulatory activity, announcing final rules, proposed rules, bulletins and grants. Here is a quick snapshot, followed by the full details below:

Meaningful Use Stage 2: The Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) released the much anticipated proposed rule for Stage 2 of “Meaningful Use.”

Actuarial Value Bulletin: The Department of Health and Human Services (HHS) released brief guidance outlining their proposed strategy for calculating the actuarial value of a health care plan.

State Innovation Waivers: This final rule describes how states can acquire a waiver that will exempt them from many provisions of the Patient Protection and Affordable Care Act (PPACA). Medicaid Transparency: HHS released a final rule to promote transparency in the Section 1115 Medicaid waiver process through increased opportunity for public comment and access to information and documentation.

More Health Insurance Exchange Grants: HHS awarded $229 million in grants to ten states for the establishment of health insurance exchanges.

Here are the details:

Meaningful Use Stage 2

CMS and ONC released the much anticipated proposed rule for Stage 2 of Meaningful Use. Created by the Health Information Technology for Economic and Clinical Health (HITECH) Act, “meaningful use” describes the standards that eligible health care professionals (such as hospitals and physicians) must meet to qualify for incentive payments through the EHR programs.

To achieve Stage 1 of Meaningful Use (started in 2011), providers must transfer data to EHRs and be able to share information, including electronic copies and visit summaries for patients. Stage 2 requirements include new standards for patient access to information and electronic information exchange between providers. The final rule for Stage 2 meaningful use pushed back the start date for Stage 2 by one year, allowing providers to remain in Sstage 1 until 2014 instead of 2013. Similar to the structure of Stage 1, the rule describes a set of 17 core objectives and several menu objectives that providers must achieve for Sstage 2. Starting in 2015, providers will face reduced payments if they are unable to meet federal standards for electronic health record utilization. Eventually, in Stage 3 of Meaningful Use, providers will have to show a demonstrable impact in quality of care. More information is available here. Read more about the alignment between Stage 2 Meaningful Use and the recommendations of the BPC Task Force on Delivery System Reform and Health IT here.

Actuarial Value Bulletin

HHS released a bulletin late last week describing their intended strategy for calculating actuarial value for health plans inside and outside the health insurance exchanges. The bulletin is similar to the guidance on essential health benefits (EHB) released in December 2011, which we addressed in an earlier blog post. The bulletin provides a general approach rather than the more detailed information available in a proposed rule – so while the guidance is helpful, it leaves many questions unanswered.

Actuarial value describes the amount of money that a health plan pays for a standard population in relation to the total health care costs that population incurs. So a plan with an actuarial value of 80 percent pays, on average, 80 percent of all health care costs. One of the features of the health insurance exchanges created by (PPACA) is a standardized ranking of health plans according to their actuarial value. These rankings are allocated tiers named after metal – bronze (60 percent AV), silver (70), gold (80), and platinum (90) – and are intended to make plan comparisons more straightforward for consumers.

In the bulletin, HHS proposes a strategy for calculating actuarial value. They will develop a publicly available AV “calculator” tool. Health plans will be able to input benefit design information (such as deductible, co-insurance, maximum out-of-pocket costs) and the calculator will return an actuarial value. HHS intends to make the assumptions and data publicly available and transparent. They will also maintain a dataset that represents a “standard population” for use in the calculator.

State Innovation Waivers

Section 1332 of PPACA allows states to waive some of the requirements of the law and implement their own reforms if they are able to achieve comparable levels of coverage, federal cost and affordability. The innovation waiver allows states to opt-out of: the individual mandate, creating a health insurance exchange, the employer penalty for failure to provide coverage, essential health benefits standards, and federal subsidies to purchase insurance or tax credits for small businesses. The final rule released by CMS and the U.S. Department of Treasury (DOT) last week establishes the process for applying for a waiver, including mandatory public comment periods and standards for reporting and monitoring the progress of awardees. States may start applying for waivers in 2017. A bill proposed by Senators Ron Wyden (D-OR) and Scott Brown (R-MA), and endorsed by President Obama, last year would push the application deadline back to 2014.

Medicaid and CHIP Waiver Transparency

CMS released a final rule for increasing transparency in Medicaid and Children’s Health Insurance Program (CHIP) Section 1115 waiver demonstrations. Medicaid waivers allow states to waive certain federal requirements for the Medicaid program to test new and innovative strategies for improving access to care and lowering costs.

The focus of this regulation is increasing transparency at the state level and providing greater opportunity for public awareness and comment. The rule establishes a 30-day public comment process at the federal and state level, and ensures that relevant materials are accessible on the web. This regulation was prompted by a provision in PPACA and helps to address previous criticism that the waiver process lacked adequate accountability.

More Grants for Establishing Health Insurance Exchanges

Last week, HHS awarded $229 million in grants to ten states for the establishment of health insurance exchanges. To date, HHS has distributed over $600 million in establishment funding to over 30 states. More regulation is expected soon – we’ll keep you posted!

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