Health reform reconciliation bill now law

Yesterday President Obama signed the Health Care and Education Reconciliation Act of 2010 into law. Together with the Patient Protection and Affordable Care Act, which Obama signed into law on March 23, the initial reform package for the U.S. healthcare system is now complete, reports MedPage Today.

Here are some of the key changes effected by the Reconciliation Act: 

* The Patient Protection Act established "a Medicaid state plan option to provide a community-based attendant services and supports benefit to those who meet the state's nursing facility clinical eligibility standards," says the SCAN Foundation in Long Beach, Calif. The Reconciliation Act changes the start date from Oct. 1, 2010, to Oct. 1, 2011.

* The Patient Protection Act would have increased the initial coverage limit in the standard Part D benefit by $500 for 2010 (i.e., decreasing the time a Part D enrollee would need to be in the coverage gap). The Reconciliation Act repeals this provision, says SCAN.

* The Patient Protection Act set rules for closing the Medicare Part D coverage gap or "doughnut hole." The Reconciliation Act amends this section to give, effective Jan. 1, 2010, a $250 rebate to Medicare beneficiaries who reach the Part D coverage gap this year, as well as phasing down the coinsurance rate in the coverage gap from 100 percent to 25 percent by 2020, says SCAN. The Reconciliation Act also mandates that drug companies provide a 50 percent discount on brand-name drug prescriptions filled in the coverage gap (effective Jan. 1, 2011), in addition to providing federal subsidies of 25 percent of the brand‐name drug cost by 2020 (phased in beginning Jan. 1, 2013) and federal subsidies of 75 percent of the generic drug cost by 2020 for prescriptions filled in the coverage gap (phase-in begins in 2011).

* The Patient Protection Act instituted market basket update adjustments for productivity, cutting reimbursement by $103 billion over 10 years starting in 2010, notes the Healthcare Financial Management Association (HFMA). The Reconciliation Act increases productivity adjustments for an additional $9.9 billion reduction in reimbursements over 10 years.

* The Patient Protection Act cut Medicare and Medicaid disproportionate-share hospital (DSH) payments by $44 billion over 10 years beginning in 2015. Under the Reconciliation Act, DSH reductions begin in 2014, but payment reductions are lowered by $3 billion for Medicare and $4.1 billion for Medicaid, says the HFMA.

* The Patient Protection Act expanded Medicaid coverage to 133 percent of the federal poverty level (FPL). That stands under the Reconciliation Act, but a revised definition of income means that Medicaid should cover an additional 1 million beneficiaries for a total of 16 million new enrollees.

* The Patient Protection Act set insurance mandates for individuals and companies, instituting penalties for noncompliance. The Reconciliation Act sets the individual penalty at the greater of $695 per uninsured adult by 2016 or 2.5 percent of income "capped at the national average 'bronze' plan premium," as well as maintaining sliding scale subsidies up to 400 percent of the FPL, says the HFMA. The Reconciliation Act sets the company penalty at a flat fee of $2,000 per uncovered full-time employee receiving eligibility subsidies, "but allows the first 30 uncovered to be subtracted out," says the HFMA. 

To learn more about the Reconciliation Act:
- read the MedPage Today article
- check out the SCAN Foundation policy brief
- read this HFMA comparison

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