1. The ACA and Rural America
(and other workings of the
Federal Government)
David Lee
National Rural Health Association

2. NRHA Mission
The National Rural Health Association is a
national membership organization with more
than 21,000 members whose mission is to
provide leadership on rural issues
through advocacy, communications,
education and research.

3. Today
• The Federal Budget—Are we open or are we
closed? What about default?
• What does it mean for the ACA?
• What does the ACA mean for rural?
• What is the future of the ACA?

4. Disclaimers:
• NRHA did NOT take a position on full
passage of the ACA
• NRHA actively sought for the inclusion of
rural-relevant funding and program
enhancements in the ACA
• Since passage, NRHA’s Rural Health
Congress has passed policy encouraging
states to expand Medicaid

5. Disclaimers
• NRHA is actively working to help
members take advantage of ACA
programs and grants, help State
Associations advocate for Medicaid
expansion, and enroll in the various
provider-side programs established in the
Act, including 340B, ACOs, and being
listed as Essential Community Providers

6. The Current Federal Budget
Situation
• Sept. 20: House approves legislation (a Continuing
Resolution or CR) denying money for much of
President Barack Obama's health care law while
keeping the government open through Dec. 15.
• Sept. 24-25: Sen. Ted Cruz, R-Texas, and other
conservatives speak on the Senate floor for more
than 21 consecutive hours against the health care
law in attempt to delay votes.

7. • Sept. 27: The Senate sends a bill keeping agencies open
through Nov. 15 back to the House, after removing Houseapproved provision defunding the health care law.
• Sept. 29: House shifts its demands for restricting the health
care law. It votes to delay implementation of the health care
overhaul by a year and to repeal the “medical device tax”.
Separately, the House votes to pay active duty troops, and
some Defense Department civilian workers and defense
contractors, in case of a shutdown. The next day, the
Senate approves the second bill and Obama signs it into
law.

8. • Sept. 30: Senate removes House provisions postponing the
health care law and erasing the medical device tax. The House
reworks its shutdown bill, delaying for a year the health care
law's requirement that individuals buy health insurance and
requiring members of Congress and their staff to pay the full
expense of health insurance, without the government paying
part of the costs. The Senate quickly kills the House health
care provisions.
• Oct. 1: The government's new fiscal year begins and the partial
federal shutdown starts. The House stands by its language
delaying required individual health coverage and blocking
federal health insurance subsidies for Congress, and requests
formal negotiations with the Senate. The Senate rejects the
House effort for a formal conference committee.

9. • Oct. 2: Embarking on a strategy of voting to restart
popular programs, the House passes smaller bills to
reopen national parks and the National Institutes of
Health and letting the District of Columbia municipal
government spend money. House Democrats mostly
vote "no" and Senate leaders ignore the measures,
saying the entire government must reopen.
• Oct. 3: House votes to pay members of the National
Guard and Reserves and finance veterans' programs.

10. • Oct. 4: House votes to finance federal disaster aid
programs and feeding programs for infants and pregnant
women. The shutdown fight is increasingly tied to the
need for Congress to renew federal borrowing authority
by Oct. 17 or risk an economy-rattling government
default. House leaders increasingly shift their conditions
for passage of the shutdown and debt limit bills to deficit
reduction.
• Oct. 5: House votes to pay furloughed federal workers
when the shutdown ends. DOD recalls 350,000
furloughed workers back to work immediately.

11. • Oct. 6: House Speaker John Boehner says House won't
pass bills ending shutdown or raising debt limit without
negotiations on GOP demands.
• Oct. 7: House votes to fund Food and Drug Administration
programs.
• Oct. 8: House votes to finance Head Start, pay civil
servants working during the shutdown and create a panel of
lawmakers to negotiate on deficit reduction. Obama and
Boehner suggest they might consider short-term bills ending
the shutdown and extending the debt limit to give them time
to negotiate. The Senate refuses to take up these
measures.

12. • Oct. 9: House votes to pay halted death benefits to families of
fallen troops and to finance the Federal Aviation
Administration.
• Oct. 10: Boehner proposes a six-week extension of the debt
limit, conditions it on Democrats bargaining over spending cuts
and reopening the government. Treasury Secretary Jack Lew
repeats warning that government borrowing authority expires
Oct. 17, threatening a damaging federal default. Senate
passes bill providing death benefits for slain troops and sends
to Obama, House votes to fund border security programs.

13. • Oct. 12: Boehner tells House Republicans that
negotiations with White House have stalled. Senate
Majority Leader Harry Reid, D-Nev., and Senate
Minority Leader Mitch McConnell, R-Ky., begin talks.
Senate rejects Democratic effort to debate debt limit
extension through 2014.
• Oct. 13: Senator Susan Collins (R-ME) proposes a
compromise to reopen the government and extend
the debt ceiling beyond CY 2013 while delaying the
medical device tax and establishing a joint
committee for long-term budgeting.

14. • Oct. 14-15: Senators Harry Reid (D-NV) and Mitch
McConnell (R-KY) modify the Collins proposal and
start receiving feedback from the House, the White
House, and their Caucuses.
• Oct. 15 a.m.: House announces it will move its own
debt ceiling legislation that will include a longer
medical device tax delay, install income verification
for ACA subsidies, and cancel health insurance
subsidies for members of Congress and the
presidential Cabinet.

15. • Oct 15 p.m.: Speaker Boehner pulls his proposal
from the House floor indicating that there is not
enough support to pass the bill. Aides indicate that
conservative members of his caucus joined with
Democrats to defeat his compromise solution
• October 16: Senator Harry Reid and Mitch
McConnell agree to a plan that would reopen the
Federal Government and lift the debt ceiling.

16. Final Compromise
• The plan passed by Congress LATE last night and
signed into law by the President will raise the debt
ceiling until Feb. 7, restore funding (a CR) for all
government operations until Jan. 15, and establish a
long term budget conference committee that must
report proposals by Dec. 13.
• It is unlikely that further efforts to derail the ACA will
succeed prior to Jan. 1, 2014 effective date.

17. Why do we care?
• This challenge was the last chance for Republicans
to gain concessions on the implementation of the
individual mandate prior to its statutory
implementation date.
• This saga has largely distracted the nation’s
attention from significant problems with the new
Health Insurance Exchanges (Marketplaces).

18. The ACA in Rural America

19. The Law
• The Patient Protection and Affordable Care Act was
signed into law on March 10, 2010.
• Amendments and full engrossment was
accomplished through the Education and Health
Care Reconciliation Act of 2010 signed on March
30, 2010
• It is divided into 9 titlesand contains provisions that
became effective immediately, 90 days after
enactment, and six months after enactment, as well
as provisions phased in at various points through to
2020

20. The Politics in 2009 and 2010
• VERY limited bipartisan support and
opposition. Fewer than five House
Democrats supported the legislation and
fewer than five House Republicans
supported
• Only one Senate Republican voted in favor
at ANY point during the process
• No Senate Democrats voted against at any
point

21. The Law
• The law is over 2,000 pages long and creates new
programs, modifies existing programs and payment
methodologies, authorizes pilot programs,
reauthorizes existing payments and pilot projects,
and establishes new rules for Medicaid and
insurance markets
• HHS, DOD, VA, IHS, and IRS have released tensof-thousands of pages of regulations implementing
the law

22. The Legal Challenge(s)
• Almost immediately, private individuals,
institutions, and states challenged various
provisions of the bill
• Challenges include the individual mandate,
employer mandate, Medicaid expansion,
mandatory contraceptive coverage, etc.
• In July 2012, the Supreme Court issued its
ruling on the most divisive and prevalent
legal questions

23. The Ruling
• The individual mandate is a valid
exercise of Congress’s Taxing
Power.
• The mandate is not a valid exercise
of the Commerce Clause.
• Other major provisions, including
ALL rural provisions will be
implemented as outlined in the bill.
• One major exception: Medicaid.

24. The Ruling
• The federal government cannot rescind ALL
Medicaid funding if states don’t comply with
new requirements.
• The federal government can refuse NEW funds
if states don’t meet NEW Medicaid Rules.

25. The Ruling
• "Simply put, Congress may tax and
spend. This grant gives the federal
government considerable influence
even in areas where it cannot directly
regulate.
• “Congress may use this power to
establish cooperative state-federal
Spending Clause programs. The
legitimacy of Spending Clause
legislation, however, depends on
whether a State voluntarily and
knowingly accepts the terms of such
programs.”

26. The Ruling
• “The framers created a federal
government of limited powers and
assigned to this court the duty of
enforcing those limits. The court does
so today. But the court does not
express any opinion on the wisdom
of the Affordable Care Act. Under
the constitution, that judgment is
reserved to the people."

27. The Ruling
• Dissent: “The Act before us here exceeds
federal power both in mandating the purchase
of health insurance and in denying
nonconsenting states all Medicaid funding.
These parts of the Act are central to its design
and operation, and all the Act’s other
provisions would not have been enacted
without them. In our view it must follow that the
entire statute is inoperative.”

28. Major Provisions
• Major expansion of Medicaid:
• States may choose to expand Medicaid
eligibility up to 138% of the federal poverty
level.
• The federal government will pay 100% of
expansion for the first three years of
expansion and then phase down to 90%
of the costs of newly covered recipients by
2020.

29. Medicaid Expansion
• 25 states have agreed to expand their Medicaid
roles in accordance with the ACA
• Most of the expansion has taken place in
geographic pockets: New England, Upper Midwest,
and West Coast
• The Mountain West, Lower Midwest, and South
have mostly forgone expansion. Exceptions:
Colorado, New Mexico, Iowa, Arizona, Kentucky,
Arkansas

30. Medicaid Expansion
• States still have the option to expand Medicaid
whenever they see fit
• The three-year, 100% coverage by the Federal
government, is time limited
• By statute, the Federal government will only cover
all new costs for CYs 2014, 2015, and 2016

31. Major Provisions
• Establishment of Health Insurance Exchanges
•
States have the option of operating their own exchange or partnering with
the federal government to run an exchange. States choosing neither
option will default to a federally-facilitated exchange. All exchanges,
regardless of how they are administered, must be ready to begin enrolling
consumers into coverage on October 1, 2013 and must be fully
operational on January 1, 2014.
• Insurance Guarantee Issue and Renewability
• Essential Health Benefit Minimum
• Employer-based wellness programs

32. The Exchanges
• There have been significant challenges with the
exchanges, specifically the Federal Marketplace at
healthcare.gov, in the first two weeks of
administration
• Congress and the Administration have demanded
fixes and progress reports from the two main
contractors that designed the site
• State exchanges are having varying levels of
success. The more successful states usually are
those with less web traffic

33. The Exchanges
• Healthcare.gov was established to serve two
purposes:
• Clearing house for information related the Affordable Care
Act.
• Serve as the federal exchange for all those residing in
states that do not set up an independent marketplace.
• Federal government spent $400 million to set up
using contracts with health IT firms.

34. The Exchanges
• Members of both parties, from both chambers have
called the current federal exchange a “train wreck”.
• Due to poor design, software malfunctions, and
traffic to the site, very few people have been able to
create an account or enroll in a health plan.
• HHS stated earlier this week that parts of the site
may have to be rebuilt.

35. The Exchanges
• While over 9,000,000 distinct users have visited
Healthcare.gov, fewer than 100,000 have actually
enrolled in a health plan
• Web traffic to the federal exchange dropped 88%
between October 1 and October 13
• State exchanges have had some better results.
Utah and Massachusetts have had better results
since their exchanges were already established.

36. The Health IT in Exchanges
• The contracting process led to one contractor
building the user-interface inside of healthcare.gov
while another contractor built the “back-end,”
technical components.
• Early indications are that these two aren’t talking to
each other.
• The problem is similar to EHRs that won’t talk to
each other over health information exchanges in
MU.

37. The Exchanges
• In the hours since the passage of the Debt
Ceiling/CR compromise, a number of House
Committees have indicated that they intend to hold
hearings on the Federal exchange.
• In addition to the interoperability challenges, many
committees in both chambers have questioned the
fraud protections built into the cite.

38. Medicaid and the Exchanges in
states that do NOT expand
• Because the Supreme Court ruled that Medicaid
expansion was OPTIONAL, many states have not
expanded their eligibility requirements
• This has left a coverage gap or “donut hole” for
those ineligible for Medicaid but too poor to qualify
for coverage through the exchange

39. Medicaid “Donut Hole”
• Current Alabama statute offers Medicaid to adults with children
up to 16% of the federal poverty level. Alabama is not
expanding Medicaid
• In Alabama, 191,320 people are in this donut hole. This
represents 36% of all currently uninsured Alabama adults
(non-Medicare). It represents 88% of adults under 100% of the
federal poverty level
• More information:
http://kaiserfamilyfoundation.files.wordpress.com/2013/10/850
5-the-coverage-gap-uninsured-poor-adults1.pdf

40. Rural concerns with Exchange
products:
• As part of the rating system established under the
law, insurers must show that their products provide
access to local providers. The law calls these the
“essential community provider” lists.
• Because of a desire to increase the number of
products available in the exchange, insurers receive
a significant amount of deference.

41. ECPs in Rural
• Some of the insurers offering products in the
exchanges are new to rural. Others are offering
new products in the rural space.
• In order to establish an “easy” reference for who
would be an ECP, many insurers used pre-made
lists to define these providers.
• Most insurers defaulted to the 340B eligibility list for
rural determinations.

42. Concerns
• Some rural providers, like Rural Health Clinics, are
not 340B eligible and may not be included in a
insurers ECP list. This effectively makes visits to
these facilities “out of network”.
• While the list is what is commonly used, it is not
universal. If you have not talked to insurers offering
products in your state, CALL THEM NOW. Make
sure you are an ECP.

43. Health Reform? Or Health
Insurance Reform?
• “You’re a health care lobbyist? What do you think
about Obamacare?”
• There is MORE to the ACA
than Medicaid and the
Individual Mandate!!!!!

44. Rural ACA Provisions
•
•
•
•
•
•
•
Increase NHSC Funding/Slots
Residency reallocation
Expansion of 340B program (CAH/SCH)
Community Health Center funding/grants
Medicare Accountable Care Organizations
Increase AHEC funding authorization
Establishment of Rural Physician Training
Grants

45. Rural ACA Provisions
•
•
•
•
Establishment of CMMI
Pharmacy Reimbursement Increases
Primary Care Incentive Payments
1.0 Floor on the Hospital Wage Index for
Frontier States
• Community Transformation Grants

46. Rural ACA Provisions
• “Extenders”
• Establishment/Extension of Rural
Demonstration Projects
• Modification of the Low Volume Hospital
Adjustment
• Payment increases for Hospitals in
counties with the lowest Medicare
spending

47. LVH and MDH
• A straight extension of MDH was included in the
ACA. This extension was temporary, though, and
expired AGAIN on September 30.
• The LVH adjustment was dramatically expanded
from affecting only 3-4 hospitals per-year to over
600. This modification was temporary and has
expired again.
• Note on LVH: The FAH and other interested parties
are working on a lawsuit challenging the
implementation of the permanent adjustment.

48. Rural Provisions in Practice
• Accountable Care Organizations:
•
•
•
•
An ACO must meet the threshold of 5,000 Medicare beneficiaries who
receive a plurality of their services at a participating/qualifying provider
For purposes of rural they can include individual/group practices (must be
DO or MD), CAHs billing under method 2 and subsection D hospitals
including SCH and MDH
RHC, FQHC, CAHs billing under method 1 may all participate but
beneficiaries receiving a plurality of their services in these facilities are not
counted for the 5,000 threshold
ACOs are paid a standard FFS payment and then share in the savings
they produced based on:
o Amount of savings against prior, base year; and
o Number of beneficiaries in their ACO—more beneficiaries=more possible
sharing.
•
There are now 153 MSSP ACOs

49. Rural Provisions in Practice
“Pioneer” ACOs
• Program administered by the Center for Medicare and
Medicaid Innovation (CMMI) and, therefore, not subject to
the DO/MD requirements
• Intended for facilities and groups that have experience
doing this type of activity and are at a place to take more
risk and share in more savings
• Savings and loss caps applicable in the original MSSP are
not applicable here.
• There are now 32 Pioneer ACO
• Some of these ACOs have indicated they will terminate
their contract with CMMI because of an inability to produce
savings in sufficient quantities

50. Rural Provisions in Practice
Advance Payment Model
• Program administered by CMMI
• Intended to target groups that would like to participate but
are unable because of the high start up costs of ACOs.
Therefore only physician groups and rural facilities can
apply.
• Like Pioneer ACOs, they are exempt from SOME of the
strictest requirements for assignment and staffing.
• CMMI will loan the ACO funds to start the ACO and will
recoup the money later. This will be done either through
the ACO savings accrued or FFS payments withheld if no
savings accrue.
• As of July, there are 20 Advance Payment ACOs

51. Challenges to Rural
Participation in ACOs:
•
•
•
•
Beneficiary threshold
NPs, PAs ineligible for beneficiary assignment
Low sharing rate for low-beneficiary ACOs
Cost to establish with no guarantee of return on
investment
• Benchmarking savings against yourself
• Participation limited to one ACO leading to transfer
challenges

52. Affects of ACOs in the health
care marketplace
• The Medicare Payment Advisory Commission
(MedPAC) reports that consolidation, acquisitions,
and mergers are rising across the health care
market.
• The Rural Policy and Research Institute (RUPRI)
notes that this trend is increasing in rural areas as
well. The caution that the trend may be pre-existing
and unrelated to ACO development.
• Some argue that there are larger market trends and
ACOs are not to blame. Most cite ACOs as a
primary driver of this trend.

53. Rural Provisions in Practice
• Increase NHSC Funding/Slots
• Residency reallocation
• While these work workforce programs have been funded,
there has been some limited success in actual
implementation. Residency reallocation is behind schedule.
NHSC is shortage based, not rural based so all new slots not
automatically going to rural.
• Community Transformation Grants
• Despite language in the ACA that 20% of the funds had to go
to rural communities, the CDC definition of a “rural
community” was any place under 50,000 people. This
precluded a number of rural communities from successfully
receiving grants

54. Rural Provisions in Practice
• Establishment of Rural Physician Training Grants
• Increased funding authorization of Area Health
Education Centers
• Establish a National Health Care Workforce
Commission
• All three of these programs were “authorized” for significant
federal funding through the ACA. Unfortunately, Congress
has never “appropriated” money for these programs at the
same levels as contemplated in the ACA
• Again, another problem with failing to pass year-long
appropriation bills.

55. Rural Provisions in Practice
• Pharmacy Reimbursement Increases
• Starting in CY 2013, rural pharmacies will see a temporary
increase in payments; NRHA supports permanency of
change
• Primary Care Incentive Payments
• Starting in CY 2013, all Medicaid providers will get
increased payments meant to mirror Medicare rates; there
have been challenges in these payments being processed
by the feds.
• 1.0 Floor on the Wage Index for Frontier States
• All three of these payments have been targeted for repeal
as possible offsets for other spending, specifically SGR.

56. Direct rural provider concerns
• Modifications to DSH payments (2014)
• Bad Debt Reimbursement reduction* (2013)
• Failure to expand Medicaid

57. Rural provider concerns
• Lack of mandatory funding for rural health
appropriations
• Temporary extension of rural health programs
• Exclusion from ECP lists

58. What is the future of the ACA?
• Politically, it will be VERY hard to gain repeal at this
point. Assuming that Republicans win a majority in
the Senate AND the White House and maintain a
majority in the House through 2016, the ACA’s
provisions will already be pervasive throughout the
nation’s delivery systems.

59. What is the future of the ACA?
• Some tweaking will likely continue. There are a
number of concerns that members of both parties
continue to bring up:
•
•
•
•
Wage index change to benefit Massachusetts
Medical device tax
Technical components of grant and pilot programs
Technicalities of Medicaid and insurance products in the
exchanges

60. Tools
• http://www.ruralhealthweb.org/go/left/govern
ment-affairs/health-reform-and-you
• http://healthreform.kff.org/
• http://www.healthcare.gov/

61. Thank You – Stay involved




NRHA doesn’t have a PAC
Website: ruralhealthweb.org
Depends solely on grassroots advocacy
Members have access to:
 Periodic Washington Updates (webinars):
join-grassroots@lists.wisc.edu
 Rural Health Blog

http://blog.ruralhealthweb.org
Join NRHA today at ruralhealthweb.org
David Lee
dlee@nrharural.org
(202) 639-0550