Federal Issues
Welcome to the "Federal Issues" section of Children's Hospital's CAN website. Please find below a summary of the major public policy issues at the federal level impacting Children's Hospital.
Federal Health Care Reform
On March 23, President Obama signed the “Patient Protection and Affordable Care Act of 2010” (PPACA). A week later, he signed the “Health Care and Education Reconciliation Act of 2010” (HCERA), which made changes to the PPACA. The combination of these two bills encompasses the culmination of a health reform effort that began over 14 months ago. Over the next ten years, the health care reform legislation will extend health insurance coverage to 32 million currently uninsured Americans. Please find below a summary of those provisions of particular interest to Children's Hospital and our patient population.
Insurance Reforms
• Immediately establishes insurance reforms important for children, including a prohibition on pre-existing condition exclusions; requires plans to provide dependent coverage until a child turns 26; and prohibits lifetime limits on the dollar value of coverage and many annual limits on coverage as determined by the Secretary of Health and Human Services (HHS). Beginning in January 2014, individual and group health plans will be prohibited from placing annual limits on the dollar value of coverage.
Medicaid/CHIP
• Establishes an unprecedented federal payment floor for Medicaid that requires states to pay for primary care services, as defined by evaluation and management services, at Medicare levels in 2013 and 2014. States will receive 100 percent federal match for the difference between the state’s current payment rate and the Medicare payment rate.
• Beginning 2014, creates a new mandatory Medicaid eligibility category that includes all individuals with family income up to 133 percent of the federal poverty level (FPL).
• Authorizes and funds the Children's Health Insurance Program (CHIP) through Sept. 30, 2015. After that date, states may enroll CHIP-eligible children in qualified health plans that have been certified by the Secretary. Beginning on Oct. 1, 2015 states will receive a 23 percent increase in their CHIP federal matching rate.
• Requires states to maintain current Medicaid and CHIP coverage for children through Sept. 30, 2019, with the exception noted above. If states do not maintain current Medicaid and CHIP eligibility standards, methodologies and procedures for children, they risk losing all Medicaid federal matching funds. CHIP monies support the Healthy Families program in California.
• Imposes $18.1 billion in cuts to Medicaid Disproportionate Share Hospital funding in 2014-2020.
• Prohibits states from using asset tests in determining Medicaid eligibility. The law also requires states to use modified adjusted gross income to determine eligibility for Medicaid and CHIP and no longer permits most income disregards.
• Requires states to provide Medicaid coverage to individuals who were in foster care, but aged out, up to age 26.
Quality
• Prohibits states from using Medicaid federal matching funds for certain health care-acquired conditions.
• Creates an option for states to provide coverage to individuals with chronic conditions through a “health home” with enhanced federal matching funds.
• Provides for expansion of demonstration grants for improving the quality of children’s health care and the use of health information technology such as through Pediatric Quality Improvement Collaboratives and Learning Networks.
• Creates a Center for Medicare and Medicaid Innovation to test innovative payment and health care delivery models.
• Establishes a Pediatric Accountable Care Organization Demonstration Project.
Workforce
• Establishes a $30 milllion loan repayment program for pediatric specialists.
Charitable Hospital Requirements
• Establishes additional requirements for hospitals to retain their tax-exempt status, including conducting a community needs assessment at least every three years and developing a written financial assistance policy that meets specific criteria. Current California law is comparable to and in some cases more stringent than the new federal requirements.
Health Insurance Exchanges
• Includes pediatric-specific benefits in the benefit package required for health plans participating in the Exchanges.
• Establishes a “no wrong door” for children. The state exchange must inform individuals of eligibility for Medicaid, the Children’s Health Insurance Program (CHIP) or any other applicable local or state program, and enroll individuals in those programs if they are determined to be eligible.
Federal Stimulus Package (American Recovery and Reinvestment Act of 2009)
On February 1, President Obama unveiled a $3.8 trillion Federal Fiscal Year 2011 budget designed to deal with deficits while beefing up the economy and helping jobless Americans. The budget calls for spending 5.7 percent more than in the current budget overall while freezing overall discretionary spending for three years. The help on the economic front includes tax credits for businesses that hire new workers, extends unemployment benefits and directs about $25 billion in aid to states by way of a six-month extension of the temporary FMAP increase. The President's blueprint also calls for permanently extending middle-class tax cuts that were adopted in 2001 and 2003. Additionally, the President has proposed to cut about $23 billion from more than 126 programs in FY 2011. Please click here for an overview of the health care related items included in the proposed budget. At this point, it does not appear that there are program eliminations that will directly impact children’s hospitals or kid’s health care.
Recall this is only the first step in a long budget process. The President’s release represents just his recommendations for FY 2011. Congress will work over the next few months to put together their broad budget blueprint – keeping in mind the President’s recommendations- and the process will last until the Fall with subcommittees and committees working to make their own recommendations before funding levels for FY 2011 are finalized.
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Federal Medical Assistance Percentage (FMAP) - The bill includes approximately $87 billion in state fiscal relief through a temporary increase in the FMAP that will increase federal Medicaid funding to states. California is expected to receive a little over $11 billion in additional Medi-Cal funding through December 2010 The temporary FMAP increase explicitly excludes Disproportionate Share Hospital (DSH) payments.
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Disproportionate Share Hospital (DSH) Funding - The bill includes a 2.5 percentage point across-the-board increase in DSH allotments to states. Based on how California's existing DSH program is structured, the increased funding is not expected to have a direct financial impact on children's hospitals.
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Medicaid Rules Moratoria - The final bill extends until July 1, 2009, moratoria on implementation of three final Medicaid rules and enacts a moratorium on implementation of a fourth rule that has already gone into effect. Specifically, those rules are:
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Hospital Outpatient Services Rule - Went into effect on Dec. 8, 2008.
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Provider Tax Limits
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School Based Administration and Transportation Rule
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Targeted Case Management Services Rule
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Health IT - The final bill includes approximately $19 billion in financial incentives for providers to implement health IT systems. Children's hospitals will be able to access these financial incentives through a formula which will provide payment through Medicaid. Pediatricians with a Medicaid caseload of between 20 and 30 percent will be able to access as much as 2/3 of the funds otherwise available to physicians who must meet a 30 percent Medicaid caseload to access funds.
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Privacy - Children's Hospitals had advocated that the final bill NOT include language which would eliminate hospital fundraising as a "health care operation" for the purposes of HIPAA regulation. The effect of the rule would be to severely limit hospital grateful patient fundraising programs. The provision was included in the House passed bill, but not the Senate bill. The final compromise bill does not eliminate hospital fundraising as a health care operation. Instead, it directs the Department of Health and Human Services (HHS) to issue a rule which will allow recipients of written fundraising requests to opt out of receiving further requests.
FMAP Extension
Children’s Hospital’s main priority at the federal level has been to extend the enhanced FMAP provision that was part of the American Recovery and Reinvestment Act of 2009. The FMAP determines the federal share of Medicaid funding in each state. In August 2010, Congress passed and the President signed legislation extending the enhanced FMAP another six months, from January 1, 2011, through June 30, 2011. The extension will result in approximately $1.2 billion in additional Medicaid funding for California, which should help prevent additional state Medi-Cal funding reductions and may boost efforts to extend the Provider Fee Program beyond December 31, 2010.
State Children’s Health Insurance Program
On February 4, 2009, President Obama signed legislation reauthorizing funding for the State Children’s Health Insurance Program (SCHIP) for another four and a half years. The legislation will increase the number of children eligible for the program nationally from about 7 million to eleven million, with most of the expansion funded through an increase in taxes on cigarettes and other tobacco products. SCHIP funds the Healthy Families Program in California, and with the expansion included in the recently signed legislation, an estimated 18,000 additional children will receive coverage in the Central Valley
Click here for Children's Hospital Central California's website.
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