The first week of 2011 started off with some interesting developments on the health care front. First, as expected, the new House Republican Majority scheduled a vote on a bill to repeal the Patient Protection and Affordable Care Act (PPACA) as one of its first legislative action items. The vote is tentatively set for next Wed., Jan. 12. The repeal bill is expected to pass easily in the Republican House, but the Democrat-controlled Senate and White House will likely prove to be insurmountable obstacles. This will surely prove to be just the first volley in a war that will likely last at least through the next presidential election.
Meanwhile, as the nation rang in the New Year last Saturday, a host of provisions from the PPACA took effect. Many of the headline-grabbing provisions from the new law, such as the individual mandate, the employer mandate and the deadline for having exchanges up and running, do not take effect until 2014.
However, on Jan. 1, 2011, more than 20 provisions from the reform law went into effect including:
Medical Loss Ratios: Health plans must now issue rebates when their “non-claims costs”—such as executive salaries, advertising, administrative costs and, unfortunately, agent and broker commissions—exceed 15% of premium revenue in the large group market or 20% in the small group and individual markets. Health plans must begin calculating the ratios in 2011, with any rebates starting in 2012.
Tax Free Spending Account Changes: Costs for over-the-counter drugs not prescribed by a doctor will not be a reimbursable expense through a health reimbursement account or Flex Spending Accounts (FSAs).
Donut Hole Closed: Beginning this year, the PPACA stipulates that Medicare Part D beneficiaries that fall into the “donut hole” will receive a 50% discount on covered brand-name prescriptions. This will grow to a 75% discount by 2020.
Medicare Primary Care Bonus: Doctors will now receive a 10% Medicare bonus for primary care services and this will last through the end of 2015.
Preventative Care for Seniors: The law provides for certain free preventative care for seniors on Medicare.
Medicare Advantage: Rates to private Medicare Advantage plans will be reduced over time in comparison to Medicare fee-for-service rates.
Ryan Young (ryan.young@iiaba.net) is Big “I” senior director of federal government affairs.