The Affordable Care Act 2013 Update

1. The Affordable Care Act 2013 Update This publication has been created by the Area Agency on Aging, Region One with Financial assistance, in whole or in part, Through a grant from the Center for Medicare and Medicaid Services.

2. The Affordable Care Act • The Patient & Protection Affordable Care Act (PPACA) passed in 2010 has provisions that take effect each year until 2020. • The PPACA affects Medicare, Medicaid, Private and Group Health Insurance, and mandates the availability of affordable health insurance to all Americans beginning in 2014

3. Helpful Acronyms • ACA – Affordable Care Act (short for the PPACA) • CMS – Centers for Medicare and Medicaid Services • FPL – Federal Poverty Level (annual levels announced every February)

4. The ACA and Medicare • In general, the ACA will restructure payments made by Medicare with a combination of reductions in some areas, increases in others, as well as a combination of financial incentives and penalties based quality performance

5. The ACA and Medicare the ACA will restructure payments made by Medicare to a “value-based” payment system measured by the health of patients versus a “volume-based” payment system measured by the number of services provided

6. 2013 Part D Drug Costs • In 2013 the cost of prescription drugs to Medicare beneficiaries in the donut hole will continue to reduce • In 2013 beneficiaries will pay 47.5% for brand-name drugs, and 79% for generic drugs in the donut hole

7. The ACA & Part D Drug Costs • Part D drug co-insurance continues to gradually reduce for beneficiaries until 2020 when the donut hold goes away • In 2020 the donut hole coverage period will effectively become an extended initial coverage period where the costs of all drugs is 25% of the total drug cost

8. Hospital Reimbursements • Reduces or eliminates payments to hospitals for preventable and excessive hospital re-admissions effective October, 2012 • Reduces Medicare payments to certain hospitals for hospital-acquired conditions by 1% beginning in 2015

9. Primary Care Physicians • Increases reimbursement rates to primary care physicians beginning in 2013 • Provides for financial incentives to doctors for keeping patients healthy based on standardized criteria

10. Medicare Accountable Care Organizations • The ACA has selected medical networks as designated Accountable Care Organizations (ACO’s) • The ACO’s provide coordinated care through a network of primary care and specialty providers

11. Medicare Accountable Care Organizations • Accountable Care Organizations (ACO’s) are selectively available in some areas to Original Medicare beneficiaries • ACO’s are not HMO’s, and members have the same flexibility as all Original Medicare beneficiaries

12. Medicare Electronic Health Records • The ACA imposes penalties on medical providers not showing “meaningful use” toward the implementation of electronic health records beginning in 2015 • Electronic Health Records (EHR) are envisioned as key to coordinated care

13. Medicare Demonstration Projects • Various demonstration projects (pilot projects) are being established to provide better care to beneficiaries and save costs • Care Transitions demonstration projects • DMEPOS Competitive Bidding in Maricopa and Pima Counties on 7-1-13

14. Medicare Fraud & Abuse • The ACA’s ongoing effort to prevent Medicare fraud and abuse continues with enhanced fraud detection capabilities • Senior Medicare Patrol programs empower beneficiaries to be watchful for fraud and abuse

15. Medicare Advantage Plans • Payments to Medicare Advantage Plans are gradually reduced between 2012 and 2016 to be more in-line with average fee-for-service payments • 85% of plan expenditures must go toward members care to avoid penalties

16. Medigap Review Under the ACA • The ACA requires the NAIC to review Plans C and F for potential revision to include “nominal cost-sharing to encourage the use of appropriate physician services under (Medicare) Part B.” The new benefit standards are to be made available beginning January 2015

17. Independent Payment Advisory Board • Establishes a 15-member independent review board to reduce the per capita rate of growth of Medicare spending • The Board will regularly review expenditures and make recommendations to achieve reductions in payments beginning in 2015

18. Medicaid Expansion • States are permitted to opt into Medicaid expansion beginning in 2014 • Medicaid would effectively be available to all U.S. citizens and legal, permanent residents with income below 138% (133% + 5%) of the Federal Poverty Level

19. Arizona & Medicaid Expansion • Arizona has passed legislation to fully participate in Medicaid Expansion. Beginning in 2014 the Expansion goes into effect. • Health Insurance Exchanges that begin in 2014 can only offer the premium subsidies to residents with more than 100% of FPL

20. Health Insurance Marketplace • The ACA mandates that states either establish their own health insurance exchanges by October 1, 2013 or use the federal exchanges • The health insurance marketplace will offer citizens and legal residents affordable health care options regardless of pre-existing conditions

21. Arizona’s Marketplace • Arizona has decided not to establish its own exchange, as have 30 other states • Arizona’s exchange will be established and operated by the Federal Government • Administration by CMS, and will be available to consumers on 10/1/13

22. Eligibility • Citizens and legal residents • Premium subsidies are available to individuals and families with income less than 400% of FPL • Employees offered coverage by their employer are not eligible for premium credits

23. Individual Premium Limits • Premium payment limits based on income • 100-133% FPL: 2% of income • 133-150% FPL: 3-4% of income • 150-200% FPL: 4-6.3% of income • 200-250% FPL: 6.3-8.05% of income • 250-300% FPL: 8.05-9.5% of income • 300-400% FPL: 9.5% of income

24. Income Examples • For a single person (annual income • 100% of FPL = $11,490; 400% of FPL = $45,960 • For a couple (annual income) • 100% of FPL = $15,510; 400% of FPL = $62,040 • For a family of four (annual income) • 100% of FPL = $23,550; 400% of FPL = $94,200

25. Essential Benefits Package • Creates an essential health benefits package that provides a comprehensive set of services • Coverage for at least 60% of health costs • Limits annual cost-sharing to the HSA limits ($5,950/individual and $11,900/family); lower limits for those with income less than 250% FPL

26. Benefit Tiers • Bronze Plan pays 60% of costs • Silver Plan pays 70% of costs • Gold Plan pays 80% of costs • Platinum Plan pays 90% of costs • All Plans must provide essential benefits

27. The Individual Mandate • Requires U.S. Citizens and Legal Residents to have qualifying health coverage beginning in 2014 • Those without coverage face tax penalties beginning in 2014 if not covered

28. The Individual Mandate • 2014 penalty is $95 or 1% of taxable income, whichever is greater • 2015 penalty is $325 or 2% of taxable income, whichever is greater • 2016 penalty is $695 or 2.5% of taxable income, whichever is greater

29. The Individual Mandate • Exemptions to the tax penalties are available for financial hardship, religious objections, American Indians, those without coverage for less than 3 months, undocumented immigrants, and incarcerated individuals

30. Assisters and Navigators • The ACA requires that Assisters be available in 2013 to facilitate people shopping for new health insurance • The ACA requires Navigators in 2013 and beyond to help people shopping for insurance on the exchange

31. Private & Group Health Insurance • The ACA bans annual or lifetime limits on the cost of care • The ACA mandates preventive health services without a co-pay • The ACA requires that 85% of insurance revenue be spent on healthcare, and that shortfalls be refunded to members

32. Private & Group Health Insurance • Requires dependent coverage for children up to age 26 • Prevents denials or increased premiums due to pre-existing conditions, and limits waiting periods to 90 days

33. Employer Requirements • Assess employers with 50 or more FT employees that do not offer group coverage, and have at least one FT employee who receives a premium tax credit, a fee of $2,000 per FT employee (excluding first 30 employees) • This provision has been delayed to 2015

34. Employer Requirements • Employers with 50 or more FT employees that offer coverage, but have at least one FT employee receiving a premium tax credit, will pay the lesser of $3,000 for each employee receiving a premium tax credit or $2,000 for each FT employee (excluding first 30 employees) • This provision has been delayed to 2015

35. Employer Requirements • Employers with more than 200 employees are required to automatically enroll employees into employer sponsored group health insurance coverage • Employees may opt out • This provision has been delayed to 2015

36. Small Business Tax Credits • Employers with 25 or less employees and average annual wages of less than $50,000 that offer their employees group health coverage are eligible for business tax credits

37. ACA Information Resources Marketplace 1-800-318-2596 www.healthcare.gov www.cms.gov www.kff.org