States Wrestle with Health Reform Implementation

States this year will struggle to implement some of the provisions of the Accountable Care Act (ACA) while at the same time keeping an eye on efforts to repeal several of the provisions. Major reforms are set to roll out in 2014.

The Supreme Court announced in November 2011 that it would consider a lawsuit brought by 26 state governments challenging the constitutionality of both the individual mandate and Medicaid expansion. Although a decision could come as early as this summer, the court may have to defer a ruling on the individual mandate until it has run for a year. Based on a federal statute, consumers are barred from challenging a tax law until it has gone into effect and taxes have been paid.

In the meantime, all but seven states are somewhere in the process of creating a health insurance exchange, with 13 states having established an exchange either by state legislation or executive order. Twenty-three states have received federal funding but continue to study their options. Eight have so far been unable to pass legislation. State governments with strong opposition to exchanges may wait for a Supreme Court judgment before taking legislative action. But they risk cutting it close to the January 2013 deadline to determine whether they will run their own exchange or have the federal government take control.

The Institute of Medicine (IOM) recently released a consensus statement, requested by the Secretary of Health and Human Services, outlining criteria and methods to be used in the process of determining an “essential health benefit” (EHB) package as required by the ACA for state health exchanges.

All plans offered through health insurance exchanges must include the EHB package at a minimum, which is based on 10 categories, including hospital services, prescription drugs, preventive services, and maternity care. The IOM emphasized that developing this benefits package will require a delicate balance between providing needed health services and maintaining plan affordability to avoid an explosion in consumer use of subsidized and public health care programs.

Armed with a set of criteria and a preferred methodology for determining benefits from the IOM committee, the Department of Health and Human Services is expected to release EHB rules in 2012, although there is no set deadline. Coverage for dialysis treatments and immunosuppressives for transplant recipients is unclear. Policy analysts must be ready to comb through the rules to be sure these populations are accounted for. Stay tuned.

States will be responsible for ensuring that plans maintain EHB, and may have to decide whether to impose coverage requirements on private plans that may no longer provide services previously required under state law.


To see where your state stands with a health exchange, visit:

Another ACA provision on the states’ radar is the medical loss ratio (MLR) rule, which requires insurers to spend at least 80 percent of premium dollars on clinical services and quality improvement or provide rebates to consumers. Rebates for 2011 will roll out to consumers in 2012. Six states have been granted waivers by the Department of Health and Human Services owing to unstable and/or small state insurance markets. Five states have had their waiver requests denied, and seven states have waivers under consideration. The National Association of Insurance Commissioners recently passed, by a slim margin, a resolution expressing concerns with the ruling and urging Congress to increase protections for insurance brokers and agents, signaling that whether for or against, the MLR continues to be a top priority for state insurance commissioners.

On the Medicaid front, the Centers for Medicare and Medicaid Services (CMS) continues to roll out funding opportunities, authorized by provisions in the ACA, to help states manage health care costs and improve health care delivery. Eight states have been awarded grants to participate in the Medicaid Incentives for Chronic Diseases Program, a three-year pilot measuring the effects of direct incentives on consumer participation in preventive care and healthy behaviors. The newly established Center for Medicare and Medicaid Innovation recently announced the Health Care Innovation Challenge as a means to provide funding for groups to design, implement, and test innovative models of health care delivery and payment for the Medicare, Medicaid, and Children’s Health Insurance programs. Awards go up to $30 million and states are welcome to apply as separate entities or as part of a collaborative effort with other payers/providers.

January 2012 (Vol. 4, Number 1)