Five Health Policy Battles and Trends to Watch in 2012

by Rebecca Farley on January 5, 2012

1. Medicare Physician Pay Fix: In the last hours of its 2011 session, Congress enacted a short-term deal that postponed for two months a scheduled 27% reduction to Medicare physician payments. The cut was required under the Sustainable Growth Rate (SGR) formula, which compels Medicare to adjust payment rates each year to align with a predetermined rate of growth in the program. In practice, this has meant that Medicare payments would take an ever-increasing yearly cut – but each year, Congress has passed legislation postponing those cuts.

The newest 2-month “SGR fix” gives Congress until February 28 to reach a longer-term agreement to stave off the cuts. However, the same issues that plagued the December deal will continue to dog negotiators as they seek a permanent solution, with the biggest stumbling block being the question of how to pay for a long-term fix. Fiscal hawks in Congress have insisted on offsetting all costs with spending cuts elsewhere in the budget, but other legislators disagree on whether or where to seek savings. With the 2012 elections putting additional political pressure on an already divided Congress, it is unclear whether the two-month delay will be sufficient time for lawmakers to work out the details of a permanent fix – or whether they will enact another short-term patch.

2. The 2013 Budget and Congressional Efforts to Roll Back Sequestration: In another piece of 11th-hour dealmaking, Congress reached an agreement on the 2012 budget shortly before a Dec. 16 deadline – and nearly three months after the start of the 2012 fiscal year. But lawmakers have only a short respite, as the 2013 budget battle is set to begin in early February with the President’s annual release of his budget requests. For the last two fiscal years, Congress has been unable to pass the 12 annual appropriations bills in time for the fiscal year to start, meaning that the government has been funded on a series of continuing resolutions – with frequent threats of a shutdown – until lawmakers have reached a budget deal. Despite lawmakers’ growing fatigue over the constant budget battles they have experienced since the start of 2011, intransigence on the part of the most hardline legislators may once again hinder a budget deal in 2013.

Meanwhile, this year’s budget battle is complicated by the failure of the Joint Select Committee on Deficit Reduction to agree on a plan for cutting $1.2 trillion from the budget. The “Supercommittee’s” failure means that automatic, across-the-board spending cuts (also known as sequestration) will go into effect on January 1, 2013. These automatic cuts are unpalatable for many lawmakers, and Congress will likely spend much of 2012 debating whether and how to roll back the cuts. Medicaid could be at risk in this process: during the Supercommittee negotiations, several plans were put forward that would have stripped hundreds of billions of dollars from the program by converting it to a block grant or making other drastic changes. Medicaid will remain a prime target for cuts as Congress considers the possibility of finding alternative budget savings that might prevent the need for sequestration. Our in-depth analysis of the aftermath of the Supercommittee’s failure is available on our blog.

3. Supreme Court Oral Arguments (and Decision) on the Health Reform Law: In November, the Supreme Court announced that it would take up the various legal challenges that have been mounted against the Affordable Care Act since its passage in March of 2010. Three major issues are at stake: whether the individual mandate that people have health insurance is constitutional; whether the rest of the law can stand if the mandate is struck down; and whether the Medicaid expansion is an unconstitutional infringement on states’ rights. Oral arguments are currently scheduled for March 2012, and a decision will be issued later in the year. Policy analysts are watching closely to see how the decision will affect the role that health reform plays in the 2012 elections – and how it will impact the rollout of reform. Click here for a more detailed analysis of what’s at stake.

4. HHS Regulation on Essential Health Benefits: A recently published informational bulletin from the Department of Health and Human Services (HHS) outlined how the agency intends to approach its task of determining what health insurance benefits will be deemed “essential” under the Affordable Care Act. The ACA requires insurance products and Medicaid benchmark plans for the newly eligible to cover at least the minimum essential benefits package – but the law only broadly identified what these benefits are, leaving the details to be determined by HHS.

Many advocates were hoping that the agency would require a broad range of covered services, but the recent information bulletin indicates that HHS will leave states with a great deal of discretion in identifying essential benefits for their own state. Of critical importance for the behavioral health field, the bulletin recognized the importance of including mental health and addictions treatment services at parity with medical/surgical benefits. However, it did not specify how HHS intends to apply the parity law, nor how it would ensure that states are adequately including MH/SUD services in their essential benefits. These details will likely be included in future rulemaking from the agency, and could have a major impact on the adequacy of coverage available to newly eligible individuals in 2014. Read our FAQ on Essential Health Benefits here.

5. Rollout of Medicaid Health Homes and Medicare Accountable Care Organizations: 2011 saw the launch of two major initiatives around integrated service delivery and coordinated care: the Medicaid Health Homes State Option and the Medicare Shared Savings Program (which creates Accountable Care Organizations within Medicare). Congress and the federal agencies will be closely monitoring the outcomes of these initiatives to get a gage on how integrated care activities may lead to improved outcomes and lower costs. Currently, two states have initiated the Medicaid Health Homes option for individuals with mental illness, and many others are engaged in talks with SAMHSA and HHS. The National Council will continue to follow the rollout of health homes across the country and will provide updates, success stories, and resources on our blog.

Meanwhile, the Medicare Shared Savings Program for the first time provides a system of federal support for an integrated care model that incentivizes coordinated care by the comprehensive range of providers involved in patient care. The nation’s fledgling ACOs are exploring several models for incorporating behavioral healthcare – from partnering with community behavioral health agencies to creating their own behavioral health capacity in-house. Mental health and addictions treatment organizations in communities where ACOs are forming should be working to be at the table during these discussions. The National Council has created several resources to assist, including our fact sheets “A How To Guide: Partnering with Health Homes and ACOs” and “Accountable Care Organizations: The Tipping Point for Behavioral Health.” Additional information is also available on our blog.


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