Strategic Perspective


What ACA went into effect in 2016 and what to watch out for in 2017



By Sheila Lynch-Afryl, J.D., M.A.

Even though the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) was enacted more than six years ago, 2016 was an important year for the law. Not only was the ACA-created employer mandate fully implemented in 2016, but this year saw a contentious presidential race culminating in the election of Donald J. Trump (R), who vowed to repeal the ACA. This Strategic Perspective discusses the top five ACA-related pieces of legislation, final rules, and cases of 2016.

1. Legislative attempts to modify the ACA

President Barack Obama vetoed the Restoring Americans’ Healthcare Freedom Reconciliation Act (H.R. 3762), which would repeal parts of the ACA and defund Planned Parenthood (see Message in a veto: President says ACA stays put, January 13, 2016). In vetoing the bill, Obama stated that it would "reverse the significant progress we have made in improving health care in America." A later attempt to override the veto failed (see Groundhog does not see his shadow, predicts ACA will stay, February 3, 2016).

However, the ACA is far from safe from further attempts at repeal, as Trump made campaign promises to repeal and replace the ACA (see Will the ACA be repealed under President-elect Trump? November 9, 2016). In a position paper, Trump states, "On Day One of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare." In addition, Trump would permit the sale of health insurance across state lines and allow people to fully deduct health insurance premium payments from their taxes. Trump solidified his position on the ACA by nominating as HHS Secretary Rep. Tom Price (R-Ga), a staunch opponent of the ACA (see Trump selects Price, Verma to helm HHS and CMS in new administration, November 30, 2016).

At deadline, Congress was close to passing the 21st Century Cures Act, comprehensive health care legislation impacting the Food and Drug Administration, Medicare reimbursement, Medicaid coverage, as well as amending some provisions of the ACA. President Obama has indicated that he would sign the bill into law. In particular, the law, if passed, would (1) exempt small employers who operate qualified health reimbursement accounts (HRAs) from the penalties imposed by the ACA through rules relating to "group health plans"; (2) cut $800 million from the Prevention and Public Health Investment Fund established under the ACA; (3) rescind $464 million available to territories under ACA Sec. 1323(c)(1); and (4) direct HHS to collect, analyze, and report on data from states that participated in the Medicaid Emergency Psychiatric Demonstration Project establish under ACA Sec. 2707.

2. Contraceptive coverage mandate cases

In March 2016 the U.S. Supreme Court heard oral arguments and asked for supplemental briefing in Zubik v. Burwell, seven consolidated cases that challenged the contraceptive coverage mandate (see Will the weight of the contraception coverage burden on religious nonprofits tip the scales of justice?, March 23, 2016; SCOTUS asks for supplemental briefing on alternative accommodations in Zubik, March 30, 2016). The nonprofit organizations in Zubik sought a ruling that would allow them to be exempt from the requirement to provide objectionable contraceptive coverage without having to file additional paperwork stating their objection to the provision of contraceptives (see Supreme Court will hear 7 challenges to contraceptive mandate, November 10, 2015).

After much speculation about the fate of the contraceptive mandate in the Court’s hands, the Court suddenly sent Zubik v. Burwell back to the lower court without ruling on the merits (see U.S. Supreme Court kicks contraception challenge back down the road orders compromise, May 18, 2016). The Court urged the parties to examine the alternatives to the mandate’s accommodation that were suggested in their supplemental briefs, which were submitted to the court after oral arguments. Justice Sonia Sotomayor, joined by Justice Ruth Bader Ginsburg, wrote separately to emphasize that lower courts should not construe the Court’s orders "as signals of where this Court stands." Following the Zubik remand, the Court also remanded remaining cases that challenged the contraceptive mandate (see High Court rounds up remaining contraception cases and sends them back, May 25, 2016).

The future of the contraceptive mandate under Trump remains to be seen, despite the mandate’s ability to withstand previous challenges, as some see Price, Trump’s pick for HHS Secretary, as unsupportive of reproductive rights. For example, in 2015, Price voted in favor of Congressional disapproval of an action by the District of Columbia that protected employees from discrimination based on his or her reproductive decisions.

3. Final rule on nondiscrimination in federal health programs

A Final rule published May 18, 2016 (81 FR 31376), implemented Section 1557 of the ACA, which prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs and activities (see Final rule eyes equity and an end to discrimination in health care, May 18, 2016). Under the Final rule, which created new 45 C.F.R. Part 92, "on the basis of sex" includes discrimination based on pregnancy, false pregnancy, termination of pregnancy, childbirth, sex stereotyping, and gender identity.

Pursuant to 45 C.F.R. Sec. 92.201, an entity covered under the Final rule must provide meaningful access to individuals with limited English proficiency eligible to be served or likely to be encountered in its health programs and activities. In addition, a covered entity must take appropriate steps to ensure that communications with individuals with disabilities are as effective as communications with others in health programs and activities. The rule applies to an entity that operates a health program or activity, any part of which receives federal financial assistance, and certain covered entities that provide employee health benefit programs.

A lawsuit challenging the new regulations has been filed (see Lawsuit argues HHS overstepped requiring provision of transition, August 24, 2016). Five states and several physician organizations alleged that HHS’s redefinition of the term "sex" forces medical professionals to violate their medical judgment and religious beliefs and undermines states’ sovereign power to regulate health care, in violation of the Administrative Procedure Act, the First and Fifth Amendments of the U.S. Constitution, and the Religious Freedom Restoration Act, as well as claims specific to the states.

4. Lawsuit challenging government’s failure to make risk corridor payments

In March 2016 the Health Republic Insurance Company filed a class action against the U.S. government for failing to make risk corridor payments as required by the ACA (see $5B suit filed against the U.S. for promised risk corridor payments, March 2, 2016).

Section 1342 of the ACA established a temporary risk corridors program that permits the federal government and qualified health plans (QHPs) to share in gains or losses resulting from inaccurate rate setting from 2014 through 2016. The regulation at 45 C.F.R. Sec. 153.510(b) provides that when a QHP’s allowable costs for a year are between 103 and 108 percent of the target amount, HHS will pay the issuer 50 percent of the allowable costs in excess of 103 percent of the target amount. If a QHP’s costs are more than 108 percent of the target amount, HHS will pay the issuer 2.5 percent of the target amount plus 80 percent of allowable costs in excess of 108 percent of the target amount.

The Consolidated and Further Continuing Appropriations Act of 2015 (P.L. 113-235) and the Consolidated Appropriations Act, 2016 (P.L. 114-113), however, prohibited the government from paying risk corridor amounts from the funds appropriated for CMS and HHS. Indeed, in October 2015 CMS announced that insurers would be paid about 12.6 percent of their payment requests for 2014 (see Risk corridor payments will be made or become U.S. obligations, November 24, 2015). Health Republic alleged that the practical effect of the bills was to prevent HHS from making risk corridor payments due, resulting in cash flow problems for insurers.

In October, House Republicans sought to file an amicus curiae brief in an apparent attempt to prevent HHS from settling the case (see House Republicans file brief in $5B risk corridor suit, October 19, 2016). The brief noted that, while the ACA says that the "Secretary shall pay" when risk corridor payments are contemplated, the ACA did not appropriate funds for those payments. The court, however, denied the motion to file a brief, noting that the brief raised a novel ground for dismissal (see Houses amicus brief rejected in risk corridor case DOJ keeps reins, November 9, 2016).

5. Qualified entity Final rule

Section 10332 of the ACA requires the HHS Secretary to make available to qualified entities standardized extracts of Medicare claims data for the evaluation of the performance of providers and suppliers. A July 2016 Final rule (81 FR 44456, July 7, 2016) provides that qualified entities may use combined data to create nonpublic analyses and provide or sell these nonpublic analyses to authorized users (see Qualified entity rule finalized privacy concerns mandate de-identification process, July 6, 2016). A qualified entity must, however, enter a contractually binding nonpublic analyses agreement with the authorized user as a pre-condition to providing or selling de-identified analyses.

Furthermore, as part of the application review and approval process, a qualified entity and its contractors (including business associates) must execute a Data Use Agreement (DUA) with CMS that requires the qualified entity to maintain privacy and security protocols. A qualified entity must also enter a DUA with an authorized user.

What’s next for the ACA?

In light of Trump’s inauguration in January 2017, 2016 is closing with great uncertainty over the future of the ACA. Further adding to the uncertainty surrounding the ACA is the opening the U.S. Supreme Court created when Justice Antonin Scalia died suddenly in February 2016, and Republican lawmakers prevented a vote on Obama’s nominee, Merrick Garland, for his successor (see Scalia’s death certain to complicate current Supreme Court cases, cause election-year clash, February 17, 2016).

MainStory: StrategicPerspectives NewsFeed ContraceptionCoverageNews EmployerMandateNews EssentialBenefitNews GroupMarketReformNews HealthInsuranceExchangeNews IndividualMandateNews PreventiveCareNews ReinsuranceNews

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