October 1st – Huge Day for Healthcare

The first day of the federal government shutdown occurred on October 1, 2013, the same day as the start of the open enrollment period for the health insurance exchanges.  This blog post focuses on some of the top issues impacting health care policy on this date.

HHS Operating Status

Like most other federal agencies, the Department of Health and Human Services (HHS) has implemented a contingency plan, which calls for 52% of HHS employees to be placed on furlough.

Medicare Reimbursement

Despite the government shutdown, most Medicare fee-for-service reimbursement will continue as scheduled.

On October 1, 2013, the Medicare Administrative Contractors (MACs) indicated they would “continue to perform all functions related to Medicare fee-for-service claims processing and payment.”  However, according to the HHS contingency plan, health care fraud and abuse efforts will cease during the government shutdown.  In addition, CMS will be curtailing the number of recertification and initial surveys for Medicare and Medicaid providers.

ACA Implementation

Despite the HHS furlough, October 1st marked the first day of open enrollment for the health insurance exchanges.  Initially individuals were reporting that many of the individual state-based health insurance exchange sites were not working properly and the healthcare.gov website and toll-free number were experiencing problems or longer than average wait times.  However, as of yesterday afternoon, HHS informed reporters that more than 2.8 million individuals had visited the healthcare.gov website since it launched earlier that morning, the call centers received more than 81,000 calls, and there were more than 61,000 live chat requests.  HHS did not announce how many individuals had successfully enrolled in a health insurance plan offered through the exchange on this first day.

Medicare and Medicaid Provider Policies

In addition to the establishment of the new health insurance exchanges, the ACA also mandated certain Medicare and Medicaid cuts to begin on October 1, 2013, including:

  • Medicare readmissions reductions:  Under the Hospital Readmissions Reduction Program (HARP) hospitals are assessed a penalty for patients with certain conditions who return to the hospital within 30 days of discharge.  When the program began on October 1, 2012, hospitals were assessed a maximum penalty of one percent of total revenue.  As of October 1, 2013, the penalty increases to two percent of total revenue.  CMS data suggests that more than 2,200 hospitals will have their Medicare payments reduced under this program.  (More information on the program is available here.)
  • Medicaid Disproportionate Share Hospital (DSH) payments:  The Medicaid program provides additional payments—DSH payments—to hospitals that see a higher than average share of low-income beneficiaries.  The ACA reduced the overall level of Medicaid DSH payments beginning October 1, 2013 when cumulatively states will receive a $500 million cut in DSH payments.

Medicaid Expansion

Under the ACA, states who choose to do so may expand their Medicaid programs to cover uninsured individuals up to 133 percent of the federal poverty level (2013 federal poverty level figures are available here).  More than half the states have chosen to expand their Medicaid programs, as seen in this map.  Expanded Medicaid coverage begins in most states on January 1, 2014.

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