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The Patient Protection and Affordable Care Act

Detailed Summary

The Patient Protection and Affordable Care Act will ensure that all Americans have access to quality,

affordable health care and will create the transformation within the health care system necessary to

contain costs. The Congressional Budget Office (CBO) has determined that the Patient Protection and

Affordable Care Act is fully paid for, ensures that more than 94 percent of Americans have health

insurance, bends the health care cost curve, and reduces the deficit by $118 billion over the next ten

years and even more in the following decade.

The Patient Protection and Affordable Care Act addresses essential components of reform:

 Quality, affordable health care for all Americans

 The role of public programs

 Improving the quality and efficiency of health care

 Prevention of chronic disease and improving public health

 Health care workforce

 Transparency and program integrity

 Improving access to innovative medical therapies

 Community living assistance services and supports

 Revenue provisions

Title I. Quality, Affordable Health Care for All Americans The Patient Protection and Affordable Care Act will accomplish a fundamental transformation of

health insurance in the United States through shared responsibility. Systemic insurance market reform

will eliminate discriminatory practices by health insurers such as pre-existing condition exclusions.

Achieving these reforms without increasing health insurance premiums will mean that all Americans

must have coverage. Tax credits for individuals, families, and small businesses will ensure that

insurance is affordable for everyone. These three elements are the essential links to achieving

meaningful reform.

Immediate Improvements. Implementing health insurance reform will take some time. However,

many immediate reforms will take effect in 2010. The Patient Protection and Affordable Care Act

will:

 Eliminate lifetime and unreasonable annual limits on benefits, with annual limits prohibited in 2014

 Prohibit rescissions of health insurance policies

 Provide assistance for those who are uninsured because of a pre-existing condition

 Prohibit pre-existing condition exclusions for children

 Require coverage of preventive services and immunizations

 Extend dependant coverage up to age 26

 Develop uniform coverage documents so consumers can make apples-to-apples comparisons when shopping for health insurance

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 Cap insurance company non-medical, administrative expenditures

 Ensure consumers have access to an effective appeals process and provide consumer a place to turn for assistance navigating the appeals process and accessing their coverage

 Create a temporary re-insurance program to support coverage for early retirees

 Establish an internet portal to assist Americans in identifying coverage options

 Facilitate administrative simplification to lower health system costs

Health Insurance Market Reform. Beginning in 2014, more significant insurance reforms will be

implemented. Across individual and small group health insurance markets in all states, new rules will

end medical underwriting and pre-existing condition exclusions. Insurers will be prohibited from

denying coverage or setting rates based on gender, health status, medical condition, claims experience,

genetic information, evidence of domestic violence, or other health-related factors. Premiums will

vary only by family structure, geography, actuarial value, tobacco use, participation in a health

promotion program, and age (by not more than three to one).

Available Coverage. A qualified health plan, to be offered through the new American Health Benefit

Exchange, must provide essential health benefits which include cost sharing limits. No out-of-pocket

requirements can exceed those in Health Savings Accounts, and deductibles in the small group market

cannot exceed $2,000 for an individual and $4,000 for a family. Coverage will be offered at four

levels with actuarial values defining how much the insurer pays: Platinum – 90 percent; Gold – 80

percent; Silver – 70 percent; and Bronze – 60 percent. A less costly catastrophic-only plan will be

offered to individuals under age 30 and to others who are exempt from the individual responsibility

requirement.

American Health Benefit Exchanges. By 2014, each state will establish an Exchange to help

individuals and small employers obtain coverage. Plans participating in the Exchanges will be

accredited for quality, will present their benefit options in a standardized manner for easy comparison,

and will use one, simple enrollment form. Individuals qualified to receive tax credits for Exchange

coverage must be ineligible for affordable, employer-sponsored insurance any form of public insurance

coverage. Undocumented immigrants are ineligible for premium tax credits. Federal support will be

available for new non-profit, member run insurance cooperatives, and the Office of Personnel

Management will supervise the offering by private insurers of multi-State plans, available nationwide.

States will have flexibility to establish basic health plans for non-Medicaid, lower-income individuals;

states may also seek waivers to explore other reform options; and states may form compacts with other

states to permit cross-state sale of health insurance. No federal dollars may be used to pay for abortion

services.

Making Coverage Affordable. New, refundable tax credits will be available for Americans with

incomes between 100 and 400 percent of the federal poverty line (FPL) (about $88,000 for a family of

four). The credit is calculated on a sliding scale beginning at two percent of income for those at 100

percent FPL and phasing out at 9.8 percent of income at 300-400 percent FPL. If an employer offer of

coverage exceeds 9.8 percent of a worker‟s family income, or the employer pays less than 60 percent

of the premium, the worker may enroll in the Exchange and receive credits. Out of pocket maximums

($5,950 for individuals and $11,900 for families) are reduced to one-third for those with income

between 100-200 percent FPL, one-half for those with incomes between 200-300 percent FPL, and

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two-thirds for those with income between 300-400 percent FPL. Credits are available for eligible

citizens and legally-residing aliens. A new credit will assist small businesses with fewer than 25

workers for up to 50 percent of the total premium cost.

Shared Responsibility. Beginning in 2014, most individuals will be responsible for maintaining

minimum essential coverage or paying a penalty of $95 in 2014, $495 in 2015 and $750 in 2016, or up

to two percent of income by 2016, with a cap at the national average bronze plan premium. Families

will pay half the amount for children up to a cap of $2,250 for the entire family. After 2016, dollar

amounts will increase by the annual cost of living adjustment. Exceptions to this requirement are

made for religious objectors, those who cannot afford coverage, taxpayers with incomes less than 100

percent FPL, Indian tribe members, those who receive a hardship waiver, individuals not lawfully

present, incarcerated individuals, and those not covered for less than three months.

Any individual or family who currently has coverage and would like to retain that coverage can do so

under a „grandfather‟ provision. This coverage is deemed to meet the individual responsibility to have

health coverage. Similarly, employers that currently offer coverage are permitted to continue offering

such coverage under the „grandfather‟ policy.

Employers with more than 200 employees must automatically enroll new full-time employees in

coverage. Any employer with more than 50 full-time employees that does not offer coverage and has

at least one full-time employee receiving the premium assistance tax credit will make a payment of

$750 per full-time employee. An employer with more than 50 employees that offers coverage that is

deemed unaffordable or does not meet the standard for minimum essential coverage and but has at

least one full-time employee receiving the premium assistance tax credit because the coverage is either

unaffordable or does not cover 60 percent of total costs, will pay the lesser of $3,000 for each of those

employees receiving a credit or $750 for each of their full-time employees total.

Title II. The Role of Public Programs The Patient Protection and Affordable Care Act expands eligibility for Medicaid to lower income

persons and assumes federal responsibility for much of the cost of this expansion. It provides

enhanced federal support for the Children‟s Health Insurance Program, simplifies Medicaid and CHIP

enrollment, improves Medicaid services, provides new options for long-term services and supports,

improves coordination for dual-eligibles, and improves Medicaid quality for patients and providers.

Medicaid Expansion. States may expand Medicaid eligibility as early as April 1, 2010. Beginning on

January 1, 2014, all children, parents and childless adults who are not entitled to Medicare and who

have family incomes up to 133 percent FPL will become eligible for Medicaid. Between 2014 and

2016, the federal government will pay 100 percent of the cost of covering newly-eligible individuals.

In 2017 and 2018, states that initially covered less of the newly-eligible population (“Other States”)

will receive more assistance than states that covered at least some non-elderly, non-pregnant adults

(“Expansion States”). States will be required to maintain the same income eligibility levels through

December 31, 2013 for all adults, and this requirement would be extended through September 30, 2019

for children currently in Medicaid.

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Children’s Health Insurance Program. States will be required to maintain income eligibility levels

for CHIP through September 30, 2019. The current reauthorization period of CHIP is extended for two

years, to September 30, 2015. Between fiscal years 2016 and 2019, states would receive a 23

percentage point increase in the CHIP federal match rate, subject to a 100 percent cap.

Simplifying Enrollment. Individuals will be able to apply for and enroll in Medicaid, CHIP and the

Exchange through state-run websites. Medicaid and CHIP programs and the Exchange will coordinate

enrollment procedures to provide seamless enrollment for all programs. Hospitals will be permitted to

provide Medicaid services during a period of presumptive eligibility to members of all Medicaid

eligibility categories.

Community First Choice Option. A new optional Medicaid benefit is created through which states

may offer community-based attendant services and supports to Medicaid beneficiaries with disabilities

who would otherwise require care in a hospital, nursing facility, or intermediate care facility for the

mentally retarded.

Disproportionate Share Hospital Allotments. States‟ disproportionate share hospital (DSH)

allotments are reduced once a state‟s uninsured rate decreases by 45 percent. The initial reduction for

States that spent 99.90 percent of their allotments over the five-year period of 2004 through 2008

would be 50 percent, unless they are defined as low DSH states, in which case they would receive a 25

percent reduction. The initial reduction for states that spent greater than 99.90 percent of their

allotments would be 35 percent, or 17.5 percent for low DSH states in this category. As the uninsured

rate continues to decline, states‟ DSH allotments would be reduced by a corresponding amount. At no

time could a state‟s allotment be reduced by more than 50 percent compared to its FY2012 allotment.

Dual Eligible Coverage and Payment Coordination. The Secretary of Health and Human Services

(HHS) will establish a Federal Coordinated Health Care Office by March 1, 2010 to integrate care

under Medicare and Medicaid, and improve coordination among the federal and state governments for

individuals enrolled in both programs (dual eligibles).

Title III. Improving the Quality and Efficiency of Health Care The Patient Protection and Affordable Care Act will improve the quality and efficiency of U.S.

medical care services for everyone, and especially for those enrolled in Medicare and Medicaid.

Payment for services will be linked to better quality outcomes, and the Patient Protection and

Affordable Care Act will make substantial investments to improve the quality and delivery of care and

support research to inform consumers about patient outcomes resulting from different approaches to

treatment and care delivery. New patient care models will be created and disseminated, rural patients

and providers will see meaningful improvements, and payment accuracy will improve. The Medicare

Part D prescription drug benefit will be enhanced and the coverage gap, or donut hole, will be reduced.

An Independent Payment Advisory Board will develop recommendations to ensure long-term fiscal

stability.

Linking Payment to Quality Outcomes in Medicare. A value-based purchasing program for

hospitals will launch in FY2013 to link Medicare payments to quality performance on common, high-

cost conditions. The Physician Quality Reporting Initiative (PQRI) is extended through 2014, with

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incentives for physicians to report Medicare quality data – physicians will receive feedback reports

beginning in 2012. Long-term care hospitals, inpatient rehabilitation facilities, certain cancer

hospitals, and hospice providers will participate quality measure reporting starting in FY2014, with

penalties for non-participating providers.

Strengthening the Quality Infrastructure. The HHS Secretary will establish a national strategy to

improve health care service delivery, patient outcomes, and population health. The President will

convene an Interagency Working Group on Health Care Quality to collaborate on the development and

dissemination of quality initiatives consistent with the national strategy.

Encouraging Development of New Patient Care Models. A new Center for Medicare & Medicaid

Innovation will research, develop, test, and expand innovative payment and delivery arrangements.

Accountable Care Organizations (ACOs) that take responsibility for cost and quality of care will

receive a share of savings they achieve for Medicare. The HHS Secretary will develop a national,

voluntary pilot program encouraging hospitals, doctors, and post-acute providers to improve patient

care and achieve savings through bundled payments. A new demonstration program for chronically ill

Medicare beneficiaries will test payment incentives and service delivery using physician and nurse

practitioner-directed home-based primary care teams. Beginning in 2012, hospital payments will be

adjusted based on the dollar value of each hospital‟s percentage of potentially preventable Medicare

readmissions.

Ensuring Beneficiary Access to Physician Care and Other Services. The Act extends a floor on

geographic adjustments to the Medicare fee schedule to increase provider fees in rural areas and gives

immediate relief to areas affected by geographic adjustment for practice expenses. The Act extends

Medicare bonus payments for ground and air ambulance services in rural and other areas. The Act

creates a 12 month enrollment period for military retirees, spouses (and widows/widowers) and

dependent children, who are eligible for TRICARE and entitled to Medicare Part A based on disability

or ESRD, who have declined Part B.

Rural Protections. The Act extends the outpatient hold harmless provision, allowing small rural

hospitals and Sole Community Hospitals to receive this adjustment through FY2010 and reinstates cost

reimbursement for lab services provided by small rural hospitals from July 1, 2010 to July 1, 2011.

The Patient Protection and Affordable Care Act extends the Rural Community Hospital Demonstration

Program for five years and expands eligible sites to additional states and hospitals.

Improving Payment Accuracy. The HHS Secretary will rebase home health payments starting in

2014 to better reflect the mix of services and intensity of care provided to patients. The Secretary will

update Medicare hospice claims forms and cost reports to improve payment accuracy and revise the

underlying payment system to better reflect the cost of providing care to hospice patients. The

Secretary will revise Disproportionate Share Hospital (DSH) payments to better account for hospitals‟

costs of treating the uninsured and underinsured, including adjustments to DSH payments to reflect

lower uncompensated care costs resulting from increases in the number of insured patients. The bill

also makes changes to improve payment accuracy for imaging services and power-driven wheelchairs.

The Secretary will study and report to Congress on reforming the Medicare hospital wage index

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system and will establish a demonstration program to allow hospice eligible patients to receive all

other Medicare covered services during the same period.

Medicare Advantage (Part C). Medicare Advantage (MA) payments will be based on the average of

the bids submitted by insurance plans in each market. Bonus payments will be available to improve

the quality of care and will be based on an insurer‟s level of care coordination and care management,

as well as achievement on quality rankings. New payments will be implemented over a four-year

transition period. MA plans will be prohibited from charging beneficiaries cost sharing for covered

services greater than what is charged under fee-for-service. Plans providing extra benefits must give

priority to cost sharing reductions, wellness and preventive care prior to covering benefits not currently

covered by Medicare.

Medicare Prescription Drug Plan Improvements (Part D). In order to have their drugs covered

under the Medicare Part D program, drug manufacturers will provide a 50 percent discount to Part D

beneficiaries for brand-name drugs and biologics purchased during the coverage gap beginning July 1,

2010. The initial coverage limit in the standard Part D benefit will be expanded by $500 for 2010.

Ensuring Medicare Sustainability. A productivity adjustment will be added to the market basket

update for inpatient hospitals, home health providers, nursing homes, hospice providers, inpatient

psychiatric facilities, long-term care hospitals and inpatient rehabilitation facilities. The Act creates a

15-member Independent Payment Advisory Board to present Congress with proposals to reduce costs

and improve quality for beneficiaries. When Medicare costs are projected to exceed certain targets, the

Board‟s proposals will take effect unless Congress passes an alternative measure to achieve the same

level of savings. The Board will not make proposals that ration care, raise taxes or beneficiary

premiums, or change Medicare benefit, eligibility, or cost-sharing standards.

Health Care Quality Improvements. The Patient Protection and Affordable Care Act will create a

new program to develop community health teams supporting medical homes to increase access to

community-based, coordinated care. It supports a health delivery system research center to conduct

research on health delivery system improvement and best practices that improve the quality, safety,

and efficiency of health care delivery. And, it support medication management services by local health

providers to help patients better manage chronic disease.

Title IV. Prevention of Chronic Disease and Improving Public Health To better orient the nation‟s health care system toward health promotion and disease prevention, a set

of initiatives will provide the impetus and the infrastructure. A new interagency prevention council

will be supported by a new Prevention and Public Health Investment Fund. Barriers to accessing

clinical preventive services will be removed. Developing healthy communities will be a priority, and a

21 st century public health infrastructure will support this goal.

Modernizing Disease Prevention and Public Health Systems. A new interagency council is created

to promote healthy policies and to establish a national prevention and health promotion strategy. A

Prevention and Public Health Investment Fund is established to provide an expanded and sustained

national investment in prevention and public health. The HHS Secretary will convene a national

public/private partnership to conduct a national prevention and health promotion outreach and

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education campaign to raise awareness of activities to promote health and prevent disease across the

lifespan.

Increasing Access to Clinical Preventive Services. The Act authorizes important new programs and

benefits related to preventive care and services:

 For the operation and development of School-Based Health Clinics.

 For an oral healthcare prevention education campaign.

 To provide Medicare coverage – with no co-payments or deductibles – for an annual wellness visit and development of a personalized prevention plan.

 To waive coinsurance requirements and deductibles for most preventive services, so that Medicare will cover 100 percent of the costs.

 To provide States with an enhanced match if the State Medicaid program covers: (1) any clinical preventive service recommended with a grade of A or B by the U.S. Preventive

Services Task Force and (2) adult immunizations recommended by the Advisory Committee on

Immunization Practices without cost sharing.

 To require Medicaid coverage for counseling and pharmacotherapy to pregnant women for cessation of tobacco use.

 To award grants to states to provide incentives for Medicaid beneficiaries to participate in programs providing incentives for healthy lifestyles.

Creating Healthier Communities. The Secretary will award grants to eligible entities to promote

individual and community health and to prevent chronic disease. The CDC will provide grants to

states and large local health departments to conduct pilot programs in the 55-to-64 year old population

to evaluate chronic disease risk factors, conduct evidence-based public health interventions, and ensure

that individuals identified with chronic disease or at-risk for chronic disease receive clinical treatment

to reduce risk. The Act authorizes all states to purchase adult vaccines under CDC contracts.

Restaurants which are part of a chain with 20 or more locations doing business under the same name

must disclose calories on the menu board and in written form.

Support for Prevention and Public Health Innovation. The HHS Secretary will provide funding for

research in public health services and systems to examine best prevention practices. Federal health

programs will collect and report data by race, ethnicity, primary language and any other indicator of

disparity. The CDC will evaluate best employer wellness practices and provide an educational

campaign and technical assistance to promote the benefits of worksite health promotion. A new CDC

program will help state, local, and tribal public health agencies to improve surveillance for and

responses to infectious diseases and other important conditions. An Institute of Medicine Conference

on Pain Care will evaluate the adequacy of pain assessment, treatment, and management; identify and

address barriers to appropriate pain care; increase awareness; and report to Congress on findings and

recommendations.

Title V. Health Care Workforce To ensure a vibrant, diverse and competent workforce, the Patient Protection and Affordable Care Act

will encourage innovations in health care workforce training, recruitment, and retention, and will

establish a new workforce commission. Provisions will help to increase the supply of health care

workers. These workers will be supported by a new workforce training and education infrastructure.

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Innovations in the Health Care Workforce. The Patient Protection and Affordable Care Act

establishes a National Health Workforce commission to review current and projected workforce needs

and to provide comprehensive information to Congress and the Administration to align federal policies

with national needs. It will also establish competitive grants to enable state partnerships to complete

comprehensive workforce planning and to create health care workforce development strategies.

Increasing the Supply of Health Care Workers. The federal student loan program will be modified

to ease criteria for schools and students, shorten payback periods, and to make the primary care student

loan program more attractive. The Nursing Student Loan Program will be expanded and updated. A

loan repayment program is established for pediatric subspecialists and providers of mental and

behavioral health services to children and adolescents who work in a Health Professional Shortage

Area, a Medically Underserved Area, or with a Medically Underserved Population. Loan repayment

will be offered to public health students and workers in exchange for working at least three years at a

federal, state, local, or tribal public health agency. Loan repayment will be offered to allied health

professionals employed at public health agencies or in health care settings located in Health

Professional Shortage Areas, Medically Underserved Areas, or with Medically Underserved

Populations. A mandatory fund for the National Health Service Corps scholarship and loan repayment

program is created. A $50 million grant program will support nurse-managed health clinics. A Ready

Reserve Corps within the Commissioned Corps is established for service in times of national

emergency. Ready Reserve Corps members may be called to active duty to respond to national

emergencies and public health crises and to fill critical public health positions left vacant by members

of the Regular Corps who have been called to duty elsewhere.

Enhancing Health Care Workforce Education and Training. New support for workforce training

programs is established in these areas:

 Family medicine, general internal medicine, general pediatrics, and physician assistantship.

 Rural physicians.

 Direct care workers providing long-term care services and supports.

 General, pediatric, and public health dentistry.

 Alternative dental health care provider.

 Geriatric education and training for faculty in health professions schools and family caregivers.

 Mental and behavioral health education and training grants to schools for the development, expansion, or enhancement of training programs in social work, graduate psychology,

professional training in child and adolescent mental health, and pre-service or in-service

training to paraprofessionals in child and adolescent mental health.

 Cultural competency, prevention and public health and individuals with disabilities training.

 Advanced nursing education grants for accredited Nurse Midwifery programs.

 Nurse education, practice, and retention grants to nursing schools to strengthen nurse education and training programs and to improve nurse retention.

 Nurse practitioner training program in community health centers and nurse-managed health centers.

 Nurse faculty loan program for nurses who pursue careers in nurse education.

 Grants to promote the community health workforce to promote positive health behaviors and outcomes in medically underserved areas through use of community health workers.

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 Fellowship training in public health to address workforce shortages in state and local health departments in applied public health epidemiology and public health laboratory science and

informatics.

 A U.S. Public Health Sciences Track to train physicians, dentists, nurses, physician assistants, mental and behavior health specialists, and public health professionals emphasizing team-based

service, public health, epidemiology, and emergency preparedness and response in affiliated

institutions.

Supporting the Existing Health Care Workforce. The Patient Protection and Affordable Care Act

reauthorizes the Centers of Excellence program for minority applicants for health professions, expands

scholarships for disadvantaged students who commit to work in medically underserved areas, and

authorizes funding for Area Health Education Centers (AHECs) and Programs. A Primary Care

Extension Program is established to educate and provide technical assistance to primary care providers

about evidence-based therapies, preventive medicine, health promotion, chronic disease management,

and mental health.

Strengthening Primary Care and Other Workforce Improvements. Beginning in 2011, the HHS

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