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Friday, May 28, 2010

Health Care: Constitutional Rights and Legislative Powers

Kathleen S. Swendiman
Legislative Attorney

The health care reform debate raises many complex issues including those of coverage, accessibility, cost, accountability, and quality of health care. Underlying these policy considerations are issues regarding the status of health care as a constitutional or legal right. This report analyzes constitutional and legal issues pertaining to a right to health care, as well as the power of Congress to enact and fund health care programs. Following the recent passage of the Patient Protection and Affordable Care Act, P.L. 111-148, legal issues have been raised regarding the power of Congress to mandate that individuals purchase health insurance, and the ability of states to "nullify" or "opt out" of such a requirement. These issues are also discussed. 

The United States Constitution does not set forth an explicit right to health care. While the Supreme Court would likely find that the Constitution provides a right to obtain health care services at one's own expense from willing providers, the Supreme Court has never interpreted the Constitution as guaranteeing a right to health care services from the government for those who cannot afford it. The Supreme Court has, however, held that the government has an obligation to provide medical care in certain limited circumstances, such as for prisoners. 

While the United States Constitution and Supreme Court interpretations do not identify a constitutional right to health care for those who cannot afford it, Congress has enacted numerous statutes, such as Medicare, Medicaid, and the Children's Health Insurance Program, that establish and define specific statutory rights of individuals to receive health care services from the government. As a major component of many health care entitlement statutes, Congress has provided funding to pay for the health services provided under law. Most of these statutes have been enacted pursuant to Congress's authority to "make all Laws which shall be necessary and proper" to carry out its mandate "to … provide for the … general Welfare." The power to spend for the general welfare is one of the broadest grants of authority to Congress in the U.S. Constitution. The Supreme Court accords considerable deference to a legislative decision by Congress that a particular health care spending program provides for the general welfare. 

Recently, Congress enacted comprehensive health care reform legislation, P.L. 111-148, which includes a requirement, effective in 2014, that individuals purchase health insurance, and which significantly expands the Medicaid program. Several lawsuits have been filed challenging the power of Congress to enact an individual mandate under the Commerce Clause of the U.S. Constitution. In addition, several states have passed laws attempting to "nullify" or "opt out" of the federal individual health insurance mandate. Direct conflicts between federal and state laws would raise constitutional issues which are likely to be resolved in favor of the federal law under the Supremacy Clause of the U.S. Constitution. 

A number of state constitutions contain provisions relating to health and the provision of health care services. State constitutions may provide constitutional rights that are more expansive than those found under the federal Constitution since federal rights set the minimum standards for the states.


Date of Report: May 18, 2010
Number of Pages: 17
Order Number: R40846
Price: $29.95

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Thursday, May 27, 2010

Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System

Jim Hahn
Analyst in Health Care Financing


Each year since 2002, the statutory method for determining the annual updates to the Medicare physician fee schedule, known as the sustainable growth rate (SGR) system, has resulted in a reduction in the reimbursement rates (or a "negative update"). With the exception of 2002, when a 4.8% decrease was applied, Congress has passed a series of bills to override the reductions. The SGR system was established because of the concern that the Medicare fee schedule itself would not adequately constrain overall increases in spending for physicians' services. While the fee schedule limits the amount that Medicare will pay for each service, there are no limits on the volume or mix of services. The SGR system was intended to serve as a restraint on aggregate spending. If expenditures over a period are less than the cumulative spending target for the period, the update is increased. However, if spending exceeds the cumulative spending target over a certain period, future updates are reduced to bring spending back in line with the target. 

In the first few years of the SGR system, the actual expenditures did not exceed the targets and the updates to the physician were close to the Medicare economic index (MEI, a price index of inputs required to produce physician services) in the first two years (2.3% in 1998 and 1999, compared with a MEI of 2.2% in 1998 and 2.3% in 1999). For the next two years, in 2000 and 2001, the actual physician fee schedule update was more than twice the MEI for those years (5.5% update vs. MEI of 2.4% in 2000, 5.0% update vs. MEI of 2.1% in 2001). However, beginning in 2002, the actual expenditure exceeded allowed targets and the discrepancy has grown with each year, resulting in a series of ever-larger cuts under the formula. 

Some criticisms of the SGR system point to purported flaws in the technical details behind the formula, while others have just expressed displeasure with the resultant outcome. Although modifications have been proposed to replace the SGR system, no proposal has garnered sufficient support and almost all proposals would be expensive to implement compared against the current baseline, which necessarily assumes that significant cuts to the fee schedule will occur. 

Legislative activity in the current session of Congress includes several bills. S. 1776 would have (1) set the update to the conversion factor at 0% for 2010 and in subsequent years, and (2) sunset the SGR system immediately. On October 21, 2009, the cloture motion to proceed to the bill was not invoked by the Senate by a vote of 47-53. H.R. 3961 would create two categories of physician services (evaluation, management, and preventive services in one category with all other physician services in the other), each with its own separate target growth rate and conversion factor update. CBO has estimated that implementing the bill would increase direct spending by about $210 billion over the 2010-2019 period. On November 19, 2009, the House passed H.R. 3961 by a vote of 243-183, but the Senate has yet to take up the bill. The health care reform bill under consideration in the Senate, an amendment in the form of a substitute to H.R. 3590, does not address this issue. The FY2010 Defense Appropriations Act delayed the implementation of the reductions for two months, until February 28, 2010. The Statutory Pay-As-You-Go Act of 2010 (P.L. 111-139) exempts the amount it would cost to freeze payments for five years from PAYGO rules. H.R. 4691, which became law on March 2, 2010, delayed the payment cuts through March 31, 2010. On April 15, the Senate passed an amended version of H.R. 4851 that extended the payment cut delay through May 31, 2010. The House passed the amended bill and the President signed P.L. 111-157 into law that day.



Date of Report: May 24, 2010
Number of Pages: 21
Order Number: R40907
Price: $29.95

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Wednesday, May 26, 2010

Medicaid: The Federal Medical Assistance Percentage (FMAP)

Chris L. Peterson
Specialist in Health Care Financing


Medicaid is a health insurance program jointly funded by the federal government and the states. Generally, eligibility for Medicaid is limited to low-income children, pregnant women, parents of dependent children, the elderly, and people with disabilities. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). The remainder is referred to as the nonfederal share, or state share. 

Generally determined annually, the FMAP is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita income relative to the national average (and vice versa for states with higher per capita incomes). For FY2010, the regular FMAPs—that is, excluding the impact of the temporary FMAP increase included in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5)—range from 50.00% to 75.67%. 

In the State Children's Health Insurance Program (CHIP), expenditures are generally reimbursed at the enhanced FMAP (E-FMAP). This is calculated by reducing the state share under the regular FMAP by 30%. 

In the 111th Congress, ARRA included a temporary FMAP increase for nine quarters, subject to certain requirements. The Administration estimated that the provision will increase federal payments to states by more than $90 billion. For the first quarter of FY2010, the FMAPs reflecting the ARRA increase ranged from 61.12% (Alaska) to 84.86% (Mississippi). (The ARRA FMAP increase does not affect the CHIP E-FMAP.) The ARRA FMAPs end December 31, 2010. 

On March 10, 2010, the Senate passed H.R. 4213, which included a provision to extend the ARRA FMAPs by two quarters, through June 30, 2011. On May 20, 2010, the House Ways and Means Committee posted a House amendment to the Senate-passed version. The legislative section on the ARRA FMAP extension in the new House amendment is nearly identical to the Senate-passed provision. 

The new health reform law enacted March 23, 2010 (P.L. 111-148, H.R. 3590, the Patient Protection and Affordable Care Act, or PPACA, as amended by P.L. 111-152), did not extend the ARRA FMAPs. PPACA requires that for states to get any Medicaid matching funds, they cannot make Medicaid or CHIP "eligibility standards, methodologies, or procedures" more restrictive than those in effect on March 23, 2010, PPACA's enactment date. In 2014, the law requires states with Medicaid programs to expand coverage to some currently ineligible low-income parents and childless adults. For these newly eligible individuals, states will have a 100% FMAP for three years and then slightly reduced rates well above regular FMAPs
.


Date of Report: May 21, 2010
Number of Pages: 22
Order Number: RL32950
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Mental Health Parity and the Patient Protection and Affordable Care Act of 2010

Amanda K. Sarata
Specialist in Health Policy


The Patient Protection and Affordable Care Act (PPACA, P.L. 111-148, as modified by P.L. 111- 152, the Health Care and Education Reconciliation Act of 2010) contains a number of provisions that generally combine to extend the reach of existing federal mental health parity requirements. Prior to 1996, health insurance coverage for mental illness had historically been less generous than that for other physical illnesses. Mental health parity is a response to this disparity in insurance coverage, and generally refers to the concept that health insurance coverage for mental health services should be offered on par with covered medical and surgical benefits. 

Prior to enactment of PPACA, two major mental health parity laws had been passed at the federal level, and together created the federal mental health parity requirements. These two laws are the Mental Health Parity Act of 1996 (MHPA, P.L. 104-204), which requires parity in annual and aggregate lifetime limits, and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA, P.L. 110-343), which expands parity requirements to treatment limitations, financial requirements (e.g., co-payments), and in- and out-of-network covered benefits. Neither of these laws mandates the coverage of any specific mental health condition; rather, where an insurer chooses to cover both mental health and medical and surgical benefits, they are required to do so in compliance with these parity requirements. 

PPACA contains a number of provisions which, when considered together, achieve two key goals with respect to mental health parity: 1) they expand the reach of the applicability of the federal mental health parity requirements; and 2) they create a mandated benefit for the coverage of certain mental health and substance abuse disorder services (to be determined through rulemaking) in a number of specific financing arrangements. PPACA expands the reach of federal mental health parity requirements to three main types of health plans: qualified health plans as established by PPACA; Medicaid non-managed care benchmark and benchmark-equivalent plans; and plans offered through the individual market. PPACA did not alter the federal mental health parity requirements with respect to CHIP plans, but the application of the requirements to CHIP plans, as required in law prior to PPACA, is explained here in detail. This report also analyzes the impact of PPACA on the existing small employer exemption under federal mental health parity law.



Date of Report: May 24, 2010
Number of Pages: 13
Order Number: R41249
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Tuesday, May 25, 2010

Coverage under a qualified health plan for drugs prescribed to treat erectile dysfunction in the case of a convicted rapist, child molester, or other sex offender.

To: Hon. Tom Coburn
Attention: Roland R. Foster

From:
Edward C. Liu
Legislative Attorney
x7-9166


In response to your request, this memorandum discusses whether any provisions in the Patient Protection and Affordable Care Act (PPACA),1 as amended by the Health Care and Education Reconciliation Act of 2010,2 would prohibit a health insurance plan that participates in an American Health Benefit Exchange created pursuant to the PPACA from covering drugs prescribed to treat erectile dysfunction (ED) if the plan beneficiary is a convicted rapist, child molester, or other sex offender.


Date of Report: April 2, 2010
Number of Pages: 2
Order Number: M-040210-B
Price: $19.95

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Monday, May 24, 2010

Analysis of § 1312(d)(3)(D) of Pub. L. No. 111-148, The Patient Protection and Affordable Care Act, and its Potential Impact on Members of Congress and Congressional Staff

From: Jennifer A. Staman
Todd B. Tatelman
Legislative Attorneys
American Law Division

Ida Brudnick
Analyst on the Congress
Government and Finance Division


This memorandum provides an analysis of several legal and practical issues raised by the passage of § 1312(d)(3)(D) of Pub. L. No. 111-148, The Patient Protection and Affordable Care Act (PPACA), which relates to health plans for Members of Congress and congressional staff.1 First, this memorandum will address questions related to the effective date of this specific provision. Second, this memorandum will discuss the absence of a named administrative or implementing authority for Members of Congress and covered congressional staff. Third, this memorandum will discuss potential statutory interpretations of the definition of the term "Member of Congress"2 and whether it includes non-voting participants, such as Delegates, the Resident Commissioner of Puerto Rico, and their staff. Next, this memorandum will address how the definition of the term "congressional staff" could be interpreted with respect to personal staff, committee staff, leadership staff, and other employees of Congress. Finally, this memorandum will consider issues related to the availability of the Federal Employee Health Benefits Program (FEHBP) both with respect to current Members and covered congressional staff as well as Members and covered congressional staff that assume their positions after the effective date of the provision.


Date of Report: April 2, 2010
Number of Pages: 13
Order Number: M-040210-A
Price: $29.95

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Chronology of Major Effective Dates for Private Health Insurance Reforms in the Patient Protection and Affordable Care Act (PPACA) and Proposed Changes in H.R.4872, the Health Care and Education Reconciliation Act of 2010

To: Senate Republican Policy Committee
Attention: Danielle Beck

From:
Mark Newsom, Analyst in Health Financing, 7-1686


Per your request, the following chronology of major effective dates for the private health insurance reforms in Sections 1001 through 1515 of the PPACA (P.L. 111-148) includes changes proposed by H.R. 4872, the Health Care and Education Reconciliation Act of 2010.1 Please note that each provision may have additional administrative or operational requirements before or after the major effective date. For example, before issuing the uniform standards for the explanation of covered benefits, the Secretary of Health and Human Services would be expected to consult with the National Association of Insurance Commissioners (NAIC) and other key stakeholders. These administrative and operational requirements that are components of a major provision are not listed.


Date of Report: March 25, 2010
Number of Pages: 4
Order Number: M-032520
Price: $29.95

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Sunday, May 23, 2010

The Market Structure of the Health Insurance Industry

D. Andrew Austin  
Analyst in Economic Policy  

Thomas L. Hungerford  
Specialist in Public Finance

In March 2010, after more than a year of legislative deliberation, Congress passed a pair of measures designed to reform the U.S. health care system and address the twin challenges of constraining rapid growth of health care costs and expanding access to high-quality health care. On March 21, the House passed the Patient Protection and Affordable Care Act (H.R. 3590), which the Senate had approved on Christmas Eve, as well as the Health Care and Education Reconciliation Act of 2010 (H.R. 4872). President Obama signed the first measure (P.L. 111-148) on March 23 and the second on March 30 (P.L. 111-152). On November 2, 2009, the House Judiciary Committee reported out the Health Insurance Industry Antitrust Enforcement Act of 2009 (H.R. 3596), which would limit antitrust exemptions provided by the McCarran-Ferguson Act (P.L. 79-15). 

This report discusses how the current health insurance market structure affects the two policy goals of expanding health insurance coverage and containing health care costs. Concerns about concentration in health insurance markets are linked to wider concerns about the cost, quality, and availability of health care. The market structure of the health insurance and hospital industries may have contributed to rising health care costs and deteriorating access to affordable health insurance and health care. Many features of the health insurance market and the ways it links to other parts of the health care system can hinder competition, lead to concentrated markets, and produce inefficient outcomes. Health insurers are intermediaries in the transaction of the provision of health care between patients and providers: reimbursing providers on behalf of patients, exercising some control over the number and types of services covered, and negotiating contracts with providers on the payments for health services. Consequently, policies affecting health insurers will likely affect the other parts of the health care sector. 

The market structure of the U.S. health insurance industry not only reflects the nature of health care, but also its origins in the 1930s and its evolution in succeeding decades. Before World War II, many commercial insurers doubted that hospital or medical costs were an insurable risk. But after the rapid spread of Blue Cross plans in the mid-1930s, several commercial insurers began to offer health coverage. By the 1950s, commercial health insurers had become potent competitors and began to cut into Blue Cross's market share in many regions, changing the competitive environment of the health insurance market. 

Evidence suggests that health insurance markets are highly concentrated in many local areas. Many large firms that offer health insurance benefits to their employees have self-insured, which may put some competitive pressure on insurers, although this is unlikely to improve market conditions for other consumers. The exercise of market power by firms in concentrated markets generally leads to higher prices and reduced output—high premiums and limited access to health insurance—combined with high profits. Many other characteristics of the health insurance markets, however, also contribute to rising costs and limited access to affordable health insurance. Rising health care costs, in particular, play a key role in rising health insurance costs. 

Complex interactions among health insurance, health care providers, employers, pharmaceutical manufacturers, tax policy, and the medical technology industry have helped increase health costs over time. Reducing the growth trajectory of health care costs may require policies that affect these interactions. Policies focused only on health insurance sector reform may yield some results, but are unlikely to solve larger cost growth and limited access problems.


Date of Report: May 11, 2010
Number of Pages: 68
Order Number: R40834
Price: $29.95

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Friday, May 21, 2010

501(c)(3) Hospitals and the Community Benefit Standard

Erika K. Lunder
Legislative Attorney

Edward C. Liu
Legislative Attorney

The recently enacted Patient Protection and Affordable Care Act (PPACA; P.L. 111-148, § 9007) imposes requirements on hospitals with § 501(c)(3) tax-exempt status. Under the act, hospitals will be required to regularly conduct "community health needs assessments" and adopt implementation strategies to meet those needs. They are also required to have written financial assistance and emergency medical care policies that are consistent with standards imposed by the act. Furthermore, hospitals are not able to charge eligible uninsured individuals more than the lowest amounts charged to insured individuals for emergency and other medically necessary care, and they must make reasonable efforts to determine an individual's eligibility for financial assistance before beginning extraordinary collection actions. 

The act's requirements appear to reflect concerns that have arisen in recent years about whether non-profit hospitals are providing adequate public benefits to justify their tax-exempt status. Nonprofit hospitals are eligible for federal tax-exempt status as charitable organizations described in § 501(c)(3) of the Internal Revenue Code (IRC). Under the "community benefit" standard developed by the IRS, charitable hospitals are judged on whether they provide sufficient health benefits to the community. The IRS has recently developed a new annual reporting requirement (Schedule H of the Form 990) for hospitals to report information regarding their activities. 

This report examines the standard under which hospitals qualify for tax-exempt charitable status under federal law, recent inquiries made by Congress and the IRS into whether hospitals are conducting sufficient activities to justify their exemption, and Section 9007 of the Patient Protection and Affordable Care Act. The Appendix to the report discusses the new Schedule H in detail.


Date of Report: May 12, 2010
Number of Pages: 16
Order Number: RL34605
Price: $29.95

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Thursday, May 20, 2010

Health Care Flexible Spending Accounts


Janemarie Mulvey
Specialist in Aging and Income Security

Health care Flexible Spending Accounts (FSAs) are benefit plans established by employers to reimburse employees for health care expenses such as deductibles and copayments. FSAs are usually funded by employees through salary reduction agreements, although employers are permitted to contribute as well. The contributions to and withdrawals from FSAs are tax-exempt.

Historically, health care FSA contributions were forfeited if not used by the end of the year. However, in 2005, the Internal Revenue Service (IRS) formally determined that employers may extend the deadline for using unspent balances up to 2½ months after the end of the plan year (i.e, until March 15 for most plans). The Tax Relief and Health Care Act of 2006 (P.L. 109-432) allows individuals to make limited, one-time rollovers from balances in their health care FSAs to Health Savings Accounts (HSAs). In the 111th Congress, as in previous Congresses, legislation has been introduced to permit part or all of remaining balances to be rolled over to accounts next year or to qualified retirement accounts.

According to the Bureau of Labor Statistics National Compensation Survey, 33% of all workers in 2007 had access to a health care flexible spending account. When viewed by firm size, 51% of workers in firms with more than 100 workers had access to a health care FSA. The accounts were not as common for workers in small businesses. In establishments with fewer than 100 employees, 17% of the workers could choose to participate in an FSA. The average employee participation rate for FSAs has been very stable over the past decade. According to a 2008 Mercer Survey, 22% of employees participated in an FSA in 2008 (compared with 21% the prior year). In 2003, FSAs became available to federal employees for the first time. In September 2008, about 240,000 federal employees had health care FSAs.

These other points might be noted about health care FSAs:

• FSAs are limited to employees and former employees.

• The IRS imposes no dollar limit on health care FSA contributions, but employers generally do.

• FSAs generally can be used only for unreimbursed medical expenses that would be deductible under the Internal Revenue Code, but not for health insurance or long-term care insurance premiums.

• Employers may impose additional restrictions.

On March 23, President Obama signed health care reform legislation into law—the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), some provisions of which are amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152). PPACA will, among other things, limit the annual FSA contributions to $2,500 and modify the definition of qualified medical expenses to exclude over-the-counter prescriptions (not prescribed by a physician) as a qualified expense. There have also been a few legislative proposals introduced in the 111th Congress affecting FSAs.


Date of Report: May 11, 2010
Number of Pages: 12
Order Number: RL32656
Price: $29.95

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Preexisting Exclusion Provisions for Children and Dependent Coverage under the Patient Protection and Affordable Care Act (PPACA)

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

Under the Patient Protection and Affordable Care Act (P.L. 111-148, PPACA, as amended by the Health Care and Education Reconciliation Act of 2010, P.L. 111-152), a number of provisions directly affect access to health insurance coverage. Hereafter, PPACA will refer to PPACA as amended by the reconciliation act. This report provides a description of two of the provisions in PPACA that are targeted toward younger individuals, for plan years beginning six months after date of enactment (i.e., the plan year beginning after September 23, 2010). PPACA does not allow preexisting condition exclusions for children under age 19, and the law also requires plans to continue to make dependent coverage available up to age 26. .


Date of Report: May 13, 2010
Number of Pages: 8
Order Number: R41220
Price: $19.95

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Medicaid and the State Children’s Health Insurance Program (CHIP) Provisions in PPACA

Julie Stone, Coordinator  
Specialist in Health Care Financing  

Evelyne P. Baumrucker  
Analyst in Health Care Financing  

Cliff Binder  
Analyst in Health Care Financing  

Elicia J. Herz  
Specialist in Health Care Financing  

Elayne J. Heisler  
Analyst in Health Services  

Kelly Wilkicki  
Presidential Management Fellow  

Alexandra J. Rothenburger  
Analyst in Health Policy

The President signed into law H.R. 3590, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148) on March 23, 2010. Seven days later, a second bill, H.R. 4872, was signed into law by the President to modify P.L. 111-148. This second law, the Health Care and Education Reconciliation Act of 2010 (hereinafter referred to as the Reconciliation Act or HCERA; P.L. 111-152), was signed on March 30, 2010. Together these laws constitute what we now refer to as health reform law. Health reform law makes many significant changes to the private and public markets for health insurance, as well as modifies aspects of the publicly financed health care delivery system. It represents the most significant reform in health care financing since the establishment of Medicaid and Medicare in 1965. This report provides a summary of the Medicaid and CHIP provisions in health reform laws P.L. 111-148 and P.L. 111- 152. 

Regarding Medicaid eligibility, beginning in 2014, or sooner at state option, nonelderly, nonpregnant individuals with income below 133% of the federal poverty level (FPL) who were previously ineligible for Medicaid will be newly eligible for Medicaid. This change represents a significant expansion of eligibility under Medicaid. From 2014 to 2016, the federal government will cover 100% of the Medicaid costs of newly eligible individuals. In 2017, the federal share will be 95%, in 2018 it will be 94%, in 2019 it will be 93%, and in 2020 and beyond, the federal share for this population will be 90%. 

The health reform law also adds new mandatory benefits to Medicaid, including, for example, coverage of services in free-standing birthing centers. Further, it expands state options for providing home and community-based services as an alternative to institutional care, and provides financial incentives to states to do so. Among the financing changes, the law reduces Medicaid disproportionate share hospital (DSH) payments. It also increases prescription drug rebates, certain pharmacy reimbursements, primary care physician payment rates for selected preventive care services, and federal spending for the territories, among other payment system reforms. 

This report provides a summary of the Medicaid and CHIP provisions in P.L. 111-148 and P.L. 111-152. To help highlight the most important Medicaid and CHIP changes, applicable provisions are grouped into the following seven major issue areas: eligibility, benefits, financing, program integrity, demonstrations and grant funding, CHIP, and miscellaneous. The Appendix provides a cross walk between the provision titles and the amending sections of P.L. 111-148 and P.L. 111- 152. 

Another appendix will be added to the report, in an update, to include the effective dates of each provision. A forthcoming CRS report will include a more detailed timeline based on effective dates for all of the Medicaid and CHIP provisions.


Date of Report: May 13, 2010
Number of Pages: 75
Order Number: R41210
Price: $29.95

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Tuesday, May 18, 2010

Summary of Potential Employer Penalties Under the Patient Protection and Affordable Care Act (PPACA)

Hinda Chaikind
Specialist in Health Care Financing

Chris L. Peterson
Specialist in Health Care Financing

This report describes and illustrates the penalties, when applicable beginning in 2014, to employers under the new health insurance reform law—specifically, in §1513 and §10106 of the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148), as amended by §1003 of the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152). Hereafter, PPACA will refer to PPACA as amended by the reconciliation act. 

PPACA does not explicitly mandate an employer to offer employees acceptable health insurance. However, certain employers with at least 50 full-time equivalent employees will face penalties, beginning in 2014, if one or more of their full-time employees obtains a premium credit through an exchange.1 As described in greater detail below, an individual may be eligible for a premium credit either because the employer does not offer coverage or the employer offers coverage that is either not "affordable" or does not provide "minimum value."


Date of Report: May 14, 2010
Number of Pages: 10
Order Number: R41159
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Monday, May 17, 2010

Community Living Assistance Services and Supports (CLASS) Provisions in the Patient Protection and Affordable Care Act (PPACA)

Janemarie Mulvey
Specialist in Aging and Income Security

Kirsten J. Colello
Acting Section Research Manager

Under current law, the majority of paid long-term care (LTC) services are funded by public programs, such as Medicaid and Medicare. However, these programs are limited in scope and continue to face increased financial pressures. Although private LTC insurance is available to provide some financial protection against an individual's risk of the potentially high cost of LTC, fewer than 10% of individuals aged 50 and older own such a policy. Thus, for the majority of older Americans, the out-of-pocket cost of obtaining paid help for these services may far exceed their financial resources. To address gaps in LTC coverage and assist individuals and families in paying for such services, the recently enacted Patient Protection and Affordable Care Act (PPACA; P.L. 111-148) establishes a publicly administered voluntary LTC insurance program entitled the Community Living Assistance Services and Supports (CLASS) program. PPACA creates a new Title XXXII of the Public Health Service Act (PHSA) titled Community Living Assistance Services and Supports. 

This report details the CLASS provisions for benefit determination, eligibility, enrollment, oversight, and administration of the CLASS program. Once established, employed individuals aged 18 and older could voluntarily enroll in the program. CLASS enrollment would not be subject to underwriting, except for age, so coverage would be available to all persons who enroll, regardless of pre-existing conditions. Employers can choose to participate in the CLASS program. In doing so, they must automatically enroll eligible employees. Employees would then have the opportunity to "opt-out" if they do not want to participate. The Secretary of Health and Human Services (HHS) is required to develop an alternative enrollment process for selfemployed individuals, those with more than one employer, and those who have an employer that does not elect to participate. 

Premiums for the CLASS program are to be determined by the Secretary based on 75-year actuarial estimates of expected future use and expenditures. After a five-year vesting period, eligibility for benefits from the CLASS program is based on the existence of a functional or cognitive impairment that lasts for at least 90 days and that is certified by a licensed health care practitioner. Benefits to eligible recipients include a cash benefit of at least $50 a day, which varies based on the degree of the beneficiary's functional or cognitive impairment. Other benefits include advocacy services, and advice and assistance counseling on accessing and coordinating LTC services. PPACA also includes premium subsidies for workers with incomes below the federal poverty level and full-time students aged 18 to 21 who currently are working. 

This report also discusses the cost and financing for LTC services as well as the current market for private LTC insurance. It discusses the federal budget implications of the CLASS program, as estimated by the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Services (CMS). Finally, the report provides a timeline of CLASS program provisions enacted under PPACA.



Date of Report: May 3, 2010
Number of Pages: 18
Order Number: R40842
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Temporary Federal High Risk Health Insurance Pool Program

Mark Newsom
Analyst in Health Care Financing

This report briefly describes the temporary federal high risk health insurance pool program established by the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010, P.L. 111-152). Under PPACA, the federal high risk pool program is intended to help individuals with preexisting conditions who have been uninsured for six or more months to obtain health insurance coverage before 2014, when other relevant reforms take place. States can run the program or elect to have the Department of Health and Human Services operate the program in their state. 

To be a qualified high risk pool, the high insurance coverage must have an actuarial value (the average percentage of expenses that the plan would cover) of at least equal 65% of total allowed costs, and out-of-pocket costs cannot exceed $5,950 for an individual in 2010. The premiums must be established at a standard rate for a standard population, and age rating cannot exceed a factor of 4 to 1. Claims and administrative costs will be subsidized by the federal government. 

PPACA appropriates $5 billion of federal funds to support the program, available beginning on July 1, 2010, until the program ends on January 1, 2014. The Department of Health and Human Services has proposed allocating funds to states by using a combination of factors, including nonelderly population, nonelderly uninsured, and geographic cost as a guide, with the intention of reallocating funds based on actual enrollment and expenditure experiences. The Secretary of Health and Human Services may take any actions necessary to prevent deficits.


Date of Report: May 13, 2010
Number of Pages: 10
Order Number: R41235
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Thursday, May 13, 2010

Health-Related Revenue Provisions in the Patient Protection and Affordable Care Act (PPACA)

Janemarie Mulvey
Specialist in Aging and Income Security

On March 23, President Obama signed health care reform legislation into law—the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), some provisions of which are amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152). PPACA will, among other things, raise revenues to pay for expanded health insurance coverage by imposing excise taxes and fees on industries in the health care sector, limiting tax-advantaged health accounts, increasing the Medicare payroll tax on upper-income households and adding an additional tax on net investment income on upper-income households. The new law will also eliminate the tax deduction for expenses allocable to the Medicare Part D subsidy to employers. 

This report summarizes the health-related revenue provisions in PPACA.


Date of Report: May 3, 2010
Number of Pages: 12
Order Number: R41128
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The Family and Medical Leave Act: Current Legislative Activity

Linda Levine
Specialist in Labor Economics

Time off to care for one's own health problems or those of family members is not a job-protected entitlement. Thus, employees sometimes have jeopardized their continued employment to be away from the workplace to address health-related matters. With passage of the Family and Medical Leave Act of 1993 (FMLA, P.L. 103-3), Congress mandated in Title I that private employers with at least 50 employees and public employers of any size provide job-protected unpaid leave for 12 workweeks in a 12-month period to employees who meet the length-of service and hours-of-work eligibility requirement in order to care for their own, a child's, spouse's, or parent's serious health condition; to care for a newborn, newly adopted, or newly placed foster child; and upon the birth or placement of an adopted or foster child. Civil service employees are entitled to the same leave benefits under Title II of the FMLA, which is administered by the Office of Personnel Management (OPM). 

DOL replaced the act's 1995 regulation effective January 16, 2009. The final rule contains many changes and addresses regulatory issues raised by enactment of amendments to the FMLA in the National Defense Authorization Act (NDAA) of FY2008 (P.L. 110-181). The NDAA provided (1) 12 workweeks of FMLA leave to Title I FMLA-eligible employees dealing with issues arising from family members in the Guard or Reserves being called to active duty as a result of a qualifying exigency and (2) 26 workweeks of FMLA leave to Title I and Title II FMLA-eligible employees and next of kin caring for seriously injured or ill service members in the Armed Forces, Guard, or Reserves. Relatedly, in August 2009, OPM proposed regulations about military family caregiver leave for eligible civil service employees and requested comments on whether it should pursue legislation to extend P.L. 110-181's exigency leave to employees covered under Title II of the FMLA. The comment period ended on October 26, 2009. 

On October 28, 2009, the President signed into law the NDAA for FY2010, which contained further changes to the FMLA. P.L. 111-84 extends qualifying exigency leave to FMLA-eligible family members of regular and reserve members of the Armed Forces deployed to a foreign country and extends military family caregiver leave to eligible family members and next of kin of recent veterans of the Armed Forces, Guard, or Reserves. These provisions apply not only to private sector employers with at least 50 employees and public agencies (Title I of the FMLA), but also to civil service employees (Title II of the FMLA). 

The Airline Flight Crew Technical Corrections Act was the only other legislation to amend the FMLA that advanced beyond committee referral in the 110th Congress. Because a flight crewmember's work hours are based on in-flight time despite their spending more time at work (e.g., between flights), a full-time flight attendant or pilot usually works less than the 1,250 hours required for FMLA eligibility. The 111th Congress approved the reintroduced bill, which was signed into law in December 2009 as P.L. 111-119. The Airline Flight Crew Technical Corrections Act states that crewmembers who have worked or been paid for not less than 60% of their total monthly guarantee for the prior 12 months and who have worked or been paid for not less than 504 hours in the prior 12 months (excluding personal commute time and vacation, and medical or sick leave) will be considered to have fulfilled the FMLA's hours-of-work requirement.


Date of Report: May 5, 2010
Number of Pages:18
Order Number:RL31760
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Monday, May 10, 2010

Health Insurance Premium Credits in the Patient Protection and Affordable Care Act(PPACA)

Chris L. Peterson
Specialist in Health Care Financing

Thomas Gabe
Specialist in Social Policy

On March 23, 2010, the President signed into law health reform legislation (the Patient Protection and Affordable Care Act, PPACA, P.L. 111-148, as amended by the reconciliation act, P.L. 111- 152) that will, among other things, provide "premium assistance credits" beginning in 2014 to help certain individuals pay for health insurance. This report describes the premium credits as reflected in current law through this legislation (hereafter referred to simply as PPACA). 

Under PPACA, state-established "American Health Benefit Exchanges" will have to be established in every state by January 1, 2014. Exchanges will not be insurers, but will provide qualified individuals and small businesses with access to insurers' qualified health plans in a comparable way. 

Only for purchase of coverage within an exchange, advanceable, refundable premium assistance credits will be available to limit the amount of money some individuals would pay for premiums. Under PPACA, for example, a family of three just above 133% of the federal poverty line (FPL)—that is, currently with annual income of $24,352—would be required to pay 3% of its income toward premiums ($824 annually, if the proposed premium subsidies were currently in effect). A family of three just under 400% FPL ($73,240), where the premium subsidies end, would be required to pay no more than 9.5% of its income in premiums ($6,958 annually, if the proposed premium subsidies were currently in effect). 

Although the premium credits will not be available until 2014 under PPACA, the illustrations provided in this report are based on current FPLs, to reflect how the premiums families would pay compare to their current income levels. 

Relative affordability of health insurance premiums individuals and families might face within health insurance exchanges will likely vary from exchange to exchange based on a host of factors, including enrollees' age, the health of the people actually enrolled in the plan, the varying prices paid by plans for medical goods and services, the breadth of the provider network, the provisions regarding how out-of-network care is paid for (or not), and the use of tools by the plan to reduce health care utilization (e.g., prior authorization for certain tests). Examples shown in this report depict a range by which premiums might reasonably be expected to vary based on enrollees' age, and variation in medical costs across geographic areas, for purposes of illustration only. Actual premiums will likely vary among health insurance exchanges based on a wide range of factors other than those depicted in this report.


Date of Report: April 28, 2010
Number of Pages: 27
Order Number: R41137
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Medical Device User Fees and User Fee Acts

Erin D. Williams
Specialist in Public Health and Bioethics


The Food and Drug Administration (FDA) is the agency responsible for ensuring the safety and effectiveness of medical devices. An establishment may not market a device in the United States without FDA's prior approval or clearance. 

In 2002, Congress first granted FDA the authority to collect user fees from medical device establishments. The authority was granted to help reduce the time required for the agency to review and make decisions about marketing applications. Lengthy review times harmed establishments, which waited to market devices, and patients, who waited to use them. User fee law provides a revenue stream for the agency, and also requires it to set performance goals for rapid application review. 

The authority to collect medical device user fees has been authorized in five-year increments, and will expire next on October 1, 2012. In 2002, it was first established in the Medical Device User Fee and Modernization Act (MDUFMA; P.L. 107-250). Before reauthorization, it was amended by the Medical Device Technical Corrections Act (P.L. 108-214) and the Medical Device User Fee Stabilization Act of 2005 (P.L. 109-43). It has been reauthorized once, in the Medical Device User Fee Amendments of 2007 (MDUFA 2007), enacted as Title II of the Food and Drug Administration Amendments Act of 2007 (H.R. 3580; P.L. 110-85). 

Since medical device user fees were first collected in FY2003, they have comprised an increasing proportion of FDA's device budget. In FY2003, $14.8 million of user fees comprised 6.8% of the budget. In FY2007 (the year of the most recent reauthorization), $35.2 million of user fees comprised 13.2% of the budget. 

Medical device user fees have raised a number of issues. These have prompted Congress to determine the following: which activities should require fees; how user fees can be kept from supplanting federal funding, or being diverted from device review (through triggers); which activities the agency should fund with user fees; and how to qualify as a small business. (Small businesses pay reduced fee amounts.) 

In addition to addressing the above issues, medical device user fee legislation has served a secondary purpose as a moving vehicle that legislators could use to address a range of issues related to medical devices. For example, MDUFA 2007 included provisions about the extent to which FDA can delegate activities to third parties (inspections and the review of premarket notifications); establishment registration requirements (timing and electronic submission); a unique device identification system; reporting requirements for devices linked to serious injuries or deaths; and requirements that FDA and GAO conduct certain studies. MDUFMA included provisions about reprocessed single use devices and other topics. 

This report provides an overview of FDA and the medical device review process. It then presents the legislative history of user fees. Next, it explains the basics of FDA's medical device user fee system, noting the way in which various provisions have evolved. Finally, it provides an overview of non-user fee issues addressed in the device user fee acts.



Date of Report: April 26, 2010
Number of Pages: 33
Order Number: RL34571
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Thursday, May 6, 2010

FDA Amendments Act of 2007 (P.L. 110-85)

Erin D. Williams
Specialist in Public Health and Bioethics

Susan Thaul
Specialist in Drug Safety and Effectiveness

On September 27, 2007, the Food and Drug Administration Amendments Act of 2007 (FDAAA; H.R. 3580) was signed into law (P.L. 110-85). The comprehensive law reauthorizes four expiring Food and Drug Administration (FDA) programs and expands the agency's authority to regulate the safety of prescription drugs and biologics, medical devices, and foods. Understanding the way in which FDAAA changed the law governing the agency informs policy discussions aimed at additional FDA reform and reorganization, as well as those related more broadly to the quality, availability, and cost of medical products in the health care system. 

At its core, FDAAA renews the authority for two key user fee programs that were set to expire on October 1, 2007: the Prescription Drug User Fee Act (PDUFA; P.L. 107-188) and the Medical Device User Fee and Modernization Act (MDUFMA; P.L. 107-250). In FY2007, the year in which FDAAA was enacted, these programs accounted for 91% of FDA's user fee revenue and 18% of FDA's total budget. Without the reauthorizations, and absent a substantial increase in FDA's annual appropriations, the agency would have lost a significant amount of funding. 

In addition to user fee programs, FDAAA reauthorizes two other FDA authorities related to prescription drugs for pediatric populations, which were also due to expire on October 1, 2007: the Best Pharmaceuticals for Children Act (BPCA; P.L. 107-109) and the Pediatric Research Equity Act (PREA; P.L. 108-155). These laws provide marketing exclusivity incentives and requirements for studying pediatric use of drugs. FDAAA also contains provisions related to drug safety, pediatric medical devices, clinical trial databases, the creation of a new nonprofit entity to assist FDA with its mission, and food safety. 

This report presents a detailed summary of provisions in FDAAA. Each section of the report begins with background information about the FDA relevant to the passage of FDAAA and some references, if appropriate, to the two bills that formed its basis (S. 1082 and H.R. 2900), and a law that amended it (P.L. 110-316); describes FDAAA's contents; and analyzes how FDAAA changed the law. The report also contains links to pertinent CRS reports. This report, which is intended for reference use, will not be updated other than to reflect any technical changes that Congress might enact. 
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Date of Report: April 27, 2010
Number of Pages: 100
Order Number: RL34465
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Unemployment and Health Insurance: Current Legislation and Issues

Janemarie Mulvey
Specialist in Aging Policy

When workers lose their job, they can also lose their health insurance. For people with good health and luck, loss of insurance might not matter very much because they would not use many health care services anyway. However, for people who have health problems or are injured, loss of coverage can be serious. Without insurance, people often have difficulty obtaining needed care and problems paying for the care they receive. Unemployed people who cannot postpone care may incur large bills that add to their financial distress. 

The 111th Congress had passed legislation that temporarily addressed this problem. For example, the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5), as amended by P.L. 111-118, included two provisions that help some unemployed maintain or get coverage: a 65% COBRA premium subsidy (for 15 months of coverage) and an increase in the Health Coverage Tax Credit (HCTC). Most recently, the Continuing Extension Act of 2010 (P.L. 111-157) was enacted on April 15, 2010, and extended eligibility for the COBRA premium subsidy through May 31, 2010. Legislative proposals to extend the subsidy further include the Senate-passed American Workers, State and Business Relief Act (H.R. 4213), which would extend eligibility for COBRA premium subsidy to individuals who lose their jobs on or before December 31, 2010. 

In the longer-term, enactment of the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148) will enable unemployed individuals who meet certain income criteria to obtain subsidized health insurance coverage. These include expansion of Medicaid to families with incomes under 133% of the federal poverty level and premium credits and subsidies for families with income below 400% of the federal poverty level. However, beyond immediate reforms to the health insurance market, many of the provisions in PPACA will not be implemented until 2014. 

This report is divided into five parts: (1) Analysis showing the diversity of the unemployed population, (2) Analysis showing the relationship between unemployment and loss of employersponsored health insurance, (3) Summaries of current federal programs and provisions that can help some unemployed obtain or retain health insurance, (4) Summaries of legislation introduced in the 111th Congress, and (5) Additional options that might be considered.


Date of Report: April 26, 2010
Number of Pages: 20
Order Number: R40165
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Wednesday, May 5, 2010

Preexisting Exclusion Provisions for Children and Dependent Coverage under the Patient Protection and Affordable Care Act (PPACA)

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

Under the Patient Protection and Affordable Care Act (P.L. 111-148, PPACA, as amended by the Health Care and Education Act, P.L. 111-152), a number of provisions directly affect access to health insurance coverage. Hereafter, PPACA will refer to PPACA as amended by the reconciliation act. This report provides a description of two of the provisions in PPACA that are targeted toward younger individuals, for plan years beginning six months after date of enactment (i.e., the plan year beginning after September 23, 2010). PPACA does not allow preexisting condition exclusions for children under age 19, and the law also requires plans to continue to make dependent coverage available up to age 26.


Date of Report: May 4, 2010
Number of Pages: 8
Order Number: R41220
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Monday, May 3, 2010

Summary of Small Business Health Insurance Tax Credit Under the Patient Protection and Affordable Care Act (PPACA)

Chris L. Peterson
Specialist in Health Care Financing

Hinda Chaikind
Specialist in Health Care Financing

This report provides a description of the small business tax credit and illustrations of the phase-out for qualifying employers' contributions toward their workers' health insurance premiums, based on §1421 and §10105(e) of the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148). This credit is available to for-profit and nonprofit employers with fewer than 25 full-time equivalent employees with average annual wages of less than $50,000.


Date of Report: April 20, 2010
Number of Pages: 6
Order Number: R41158
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Bisphenol A (BPA) in Plastics and Possible Human Health Effects

Linda-Jo Schierow
Specialist in Environmental Policy

Sarah A. Lister
Specialist in Public Health and Epidemiology

Bisphenol A (BPA) is used to produce certain types of plastic that are used in thousands of formulations for myriad products. Containers made with these plastics may expose people to small amounts of BPA in food and water. Some animal experiments have found that fetal and infant development may be harmed by small amounts of BPA, but scientists disagree about the value of the animal studies for predicting harmful effects in people. 

In the United States and elsewhere, scientific disagreement about the possibility of human health effects that may result from BPA exposure has led to conflicting regulatory decisions regarding the safety of food containers, especially those intended for use by infants and children. In the United States, a conclusion by the Food and Drug Administration (FDA) that BPA use is safe conflicted with earlier findings by one panel of scientific advisors, and was later challenged by a second panel. These events prompted some to question FDA's process for the assessment of health risks such as this, and others to question the agency's fundamental ability to conduct such assessments competently. Recently, FDA expressed concern about possible health effects from BPA exposure and announced that it was conducting new studies on the matter, pending possible changes in its regulatory approach. 

In March 2010, the U.S. Environmental Protection Agency (EPA) released a "chemical action plan" for BPA that proposes to list BPA as a chemical of concern that may present an unreasonable risk to certain aquatic species at concentrations similar to those found in the environment, to consider rulemaking to gather additional data relevant to environmental effects, and to initiate collaborative alternatives assessment activities under its Design for the Environment (DfE) program to encourage reductions in BPA releases and exposures. 

Some food companies and bottle manufacturers have voluntarily changed to BPA-free products. It is reported that some companies are exploring alternatives to BPA-containing food cans. However, others have said that for some types of canned foods, alternatives that preserve the safety and quality of the food may not be currently available. 

In the 111th Congress, companion bills (S. 593/H.R. 1523) have been introduced that would prohibit the use of BPA in food and beverage containers regulated by the FDA. The Senate bill may be proposed as an amendment to pending food safety legislation (S. 510). A different approach to BPA regulation would be taken by a second pair of bills (S. 753/H.R. 4456) that would require Consumer Product Safety Commission (CPSC) prohibition of BPA use in children's food and beverage containers under the Federal Hazardous Substances Act. The House acted July 30, 2009, on a third approach when it approved H.R. 2749, the Food Safety Enhancement Act of 2009. Section 215 of the bill would require FDA to determine whether there was "a reasonable certainty of no harm for infants, young children, pregnant women, and adults, for approved uses of polycarbonate plastic and epoxy resin made with bisphenol A in food and beverage containers ... under the conditions of use prescribed in current [FDA] regulations." FDA would be required to notify Congress about any uses of BPA for which a determination could not be made and how the agency was planning to regulate to protect the public health. Finally, a fourth bill, H.R. 4341, would require a warning label on any food container containing BPA. 
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Date of Report: April 15, 2010
Number of Pages: 13
Order Number: RS22869
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The Medical Device Approval Process and Related Legislative Issues

Erin D. Williams
Specialist in Public Health and Bioethics

The central medical device issue for Congress is how best to help speed medical devices to consumers if they are safe and effective, and correct them or keep them from consumers if they are not. A medical device may be anything from a tongue depressor to a pacemaker. In order to be legally marketed in the United States, medical devices must be approved by the Food and Drug Administration (FDA), the agency responsible for protecting the public health by assuring the safety, efficacy, and security of human medical devices and other products. FDA's Center for Devices and Radiological Health (CDRH) is primarily responsible for medical device review. The regulation of medical devices can affect their cost, quality, and availability in the health care system. 

During reviews, FDA classifies devices according to the risk they pose to consumers. If a premarket review is warranted by the potential risk, a manufacturer must demonstrate that its device is safe and effective, or substantially equivalent to a device already on the market. FDA requires product manufacturers to register their facilities, list their devices with FDA, and follow general controls requirements. Manufacturers of FDA-approved devices are required to report serious adverse events associated with the use of their devices to FDA. In addition, tracking is required for some medical devices. 

The medical device approval process is currently funded through direct FDA appropriations from Congress, and increasingly through user fees collected from applicants. FDA's authority to collect user fees, originally authorized in 2002 (P.L. 107-250), has been reauthorized in five-year increments. It will next expire on October 1, 2012, under the terms of the FDA Amendments Act of 2007 (P.L. 110-85). 

The new health reform law (the Patient Protection and Affordable Care Act; PPACA; P.L. 111- 148, as amended by the Health Care and Education Reconciliation Act of 2010; HCERA; P.L. 111-152) contains two provisions related to medical devices. The law requires medical device related taxes as a source of revenue for health reform, and medical device manufacturers, among others, to report gifts to physicians. 

Device-related topics addressed in legislation proposed in the 111th Congress include taxes (HCERA); gift reporting requirements (PPACA); a national medical device registry (H.R. 3962); liability and preemption, as highlighted by Riegel v. Medtronic and Wyeth v. Levine (S. 540/H.R. 1346, H.R. 1086, S. 45, and S. 1324); the 501(k) clearance and device approval processes (H.R. 1321/S. 391); importation and inspection (H.R. 759 and S. 882); advertising (S. 301/H.R. 3138 and H.R. 3261); use of unapproved devices (H.R. 3261); laboratory test (in vitro diagnostic, or IVD) regulation; (H.R. 1699 and H.R. 1452); issues specific to certain devices, situations, diseases, or conditions (S. 717, S. 819, H.R. 1878, S. 586/H.R. 1483, H.R. 1380, H.R. 1236, H.R. 1142, S. 422/H.R. 1032, H.R. 1021, H.R. 554, S. 332, S. 254/H.R. 574, S. 236, H.R. 463, S. 21, H.R. 2088, H.Res. 577, and S. 1746); and certain other issues (H.R. 1531/S. 1089, H.R. 1737, S. 1733, S. 1591/H.R. 3560, H.R. 2454/S. 2998, H.R. 3012, H.R. 3090, H.R. 3242, and H.R. 3932). 

This report contains the legislative history of medical device regulation, describes FDA's approval process for medical devices, and provides an overview of the medical device-related legislative issues facing Congress.


Date of Report: April 21, 2010
Number of Pages: 34
Order Number: RL32826
Price: $29.95

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Sunday, May 2, 2010

Medicare Durable Medical Equipment: The Competitive Bidding Program

Paulette C. Morgan
Specialist in Health Care Financing

The Medicare Supplementary Medical Insurance Program (Part B) currently covers a wide variety of durable medical equipment, prosthetics, orthotics, and other medical supplies (DMEPOS) if they are medically necessary and are prescribed by a physician. 

Durable medical equipment (DME) is equipment that (1) can withstand repeated use, (2) is used to serve a medical purpose, (3) generally is not useful in the absence of an illness or injury, and (4) is appropriate for use in the home. Examples include hospital beds, blood glucose monitors, and wheelchairs. Prosthetic and orthotic devices (PO) are items that replace all or part of an internal body organ, such as colostomy bags, as well as such items as leg braces and artificial legs, arms, and eyes. Medicare also covers some items or supplies (S), such as disposable surgical dressings that do not meet the definition of DME or PO. 

Medicare generally pays for most DMEPOS on the basis of fee schedules. Unless otherwise specified by Congress, fee schedule amounts are updated each year by a measure of price inflation. However, investigations have shown that Medicare pays above-market prices for certain items of DME. Such overpayments may be due partly to the fee schedule mechanism of payment, which does not reflect market changes, such as new and less-expensive technologies, changes in production or supplier costs, or variations in prices in comparable locations. 

Congress has enacted legislation to establish a Medicare competitive acquisition program (competitive bidding) under which prices for selected DMEPOS sold in specified areas would be determined not by a fee schedule, but by suppliers' bids. The first round of the competitive bidding program began on July 1, 2008, but was halted, due to implementation concerns. DMEPOS suppliers submitted new bids for the first round "rebid" in late October of 2009. The bidding window closed in December of that same year. Under current estimations by the Centers for Medicare and Medicaid Services (CMS), the program will start in January of 2011 in nine metropolitan areas. 

Competitive bidding has been shown to decrease prices for DMEPOS, which could lead to savings for the Medicare program and lower cost sharing for the beneficiaries who use the items and services. Evidence from the competitive bidding demonstration also suggests that competition did not deteriorate beneficiary access to DMEPOS, or the quality and product selection available to them. 

However, opponents may note that the implementation has been problematic, with poor communication and an inadequate bid submission system. It remains to be seen whether new legislative requirements (MIPPA, P.L. 110-275) and administration efforts will result in the effective implementation of the program. Finally, the competitive bidding program will result in fewer suppliers participating with Medicare. In general, Members of Congress often closely scrutinize or fail to support programs that have the potential to adversely affect companies or beneficiaries in their districts.


Date of Report: April 28, 2010
Number of Pages: 21
Order Number: R41211
Price: $29.95

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Summary of Potential Employer Penalties Under PPACA (P.L. 111-148)

Hinda Chaikind
Specialist in Health Care Financing

Chris L. Peterson
Specialist in Health Care Financing

This report provides a description and illustrations of the penalties, when applicable beginning in 2014, to employers under the new health insurance reform law—specifically, in §1513 and §10106 of the Patient Protection and Affordable Care Act (PPACA, P.L. 111- 148), as amended by §1003 of the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152). Hereafter, PPACA will refer to PPACA as amended by the reconciliation act. 

PPACA does not explicitly mandate an employer to offer employees acceptable health insurance. However, certain employers with at least 50 full-time equivalents will face penalties, beginning in 2014, if one or more of their full-time employees obtains a premium credit through an exchange.1 As described in greater detail below, an individual may be eligible for a premium credit either because the employer does not offer coverage or the employer offers coverage that is not "affordable."


Date of Report: April 22, 2010
Number of Pages: 7
Order Number: R41159
Price: $29.95

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Health Insurance Premium Assistance for the Unemployed: The American Recovery and Reinvestment Act of 2009

Janemarie Mulvey, Coordinator
Specialist in Aging Policy

Hinda Chaikind
Specialist in Health Care Financing

Bernadette Fernandez
Analyst in Health Care Financing

As the nation enters its third year of the current economic recession, the unemployment rate is currently near 10%. One consequence of unemployment is that people can lose their employersponsored health insurance coverage. The 111th Congress has passed legislation that begins to address this problem. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) includes provisions to subsidize health insurance coverage through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and expand tax credits to unemployed workers through the Health Coverage Tax Credit (HCTC). ARRA includes COBRA premium subsidies of 65% to help the unemployed afford health insurance coverage from their former employer. Initially, the subsidy was available for up to 9 months to those individuals who meet the income test and who are involuntarily terminated on or after September 1, 2008, and before January 1, 2010. On December 19, 2009, the Department of Defense Appropriations Act 2010 (P.L. 111-118) extended the eligibility period for the COBRA subsidy by an additional two months (through February 28, 2010) and the maximum period for receiving the subsidy was also extended an additional six months (from 9 to 15 months). On March 2, the Temporary Extension Act of 2010 (P.L. 111-144) was enacted into law and extended eligibility for COBRA premiums subsidies to individuals who are involuntarily terminated through March 31, 2010. On April 15, the Continuing Extension Act of 2010 (P.L. 111-157) was enacted into law, extending eligibility for the COBRA premium subsidy to individuals who are involuntarily terminated through May 31, 2010. 

Under current law, individuals who are involuntarily terminated on or after May 31, 2010, would not be eligible for the COBRA premium subsidy. To address this issue, on March 10, the Senate passed H.R. 4213, the American Workers, State, and Business Relief Act, which extends eligibility for COBRA premium subsidy to individuals who lose their jobs on or before December 31, 2010. Because the original bill, H.R. 4213, was amended by the Senate in the nature of a substitute, the Senate-passed version has now gone back to the House for consideration. 

In addition, a number of provisions in ARRA make modifications to the HCTC and the Trade Adjustment Assistance (TAA) programs. These include increasing the HCTC from 65% to 80% of the cost of qualified health insurance, and expanding the eligibility criteria for TAA assistance (which, in turn, expands HCTC eligibility) to include service sector and public agency workers. 

Whether the unemployed will benefit from the premium assistance programs in ARRA depends on their individual circumstances. Those that are involuntarily terminated and lose their employer-sponsored health insurance may be eligible for the subsidy. Other individuals, although considered to be unemployed, will not meet the criteria of involuntary termination. This group includes unemployed individuals (1) who were terminated but did not have employer-sponsored coverage to begin with, (2) who voluntarily left their jobs, and (3) who are just entering or reentering the workforce. For those unemployed without health insurance coverage, they either rely on spouses and family members, purchase insurance in the individual market, or remain uninsured. It is estimated that 55% of those who were involuntarily terminated most likely had employer-sponsored coverage prior to being laid off and may benefit from the COBRA subsidies. In addition to those who are unemployed, there are other at-risk groups who are not eligible for the premium assistance provisions in ARRA but may have lost health insurance coverage due to changes in their work status. These groups include involuntary part-time workers and discouraged workers who are no longer seeking employment.


Date of Report: April 21, 2010
Number of Pages: 15
Order Number: R40420
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