Health Reform FAQs
Has the state of North Carolina created a health benefit exchange?
Legislation to authorize and create a Health Benefit Exchange, as required by the Patient Protection and Affordable Care Act (PPACA) remains pending in the North Carolina General Assembly. However, the state has received $12.4 million in federal grant money to put towards the establishment of a state-controlled exchange. If the state does not establish an exchange under the guidelines of PPACA, the federal government will step in and run the exchange for the state.
The Joint Legislative Commission on Governmental Operations has given the Department of Insurance clearance to being using these grant dollars to contract for technology services and to hire staff to that will create and manage the operations of an exchange. Such efforts will begin in 2011.
Who will become eligible for Medicaid in North Carolina?
Beginning in 2014, Medicaid will be expanded to cover any individual under age 65 with an income up to 133% of the federal poverty level (about $29,300 for a family of four as of 2010). These individuals will not be required to have dependent children as is the law in many states now. Legal immigrants must reside in the United States for five years before becoming eligible, although states can extend coverage to pregnant women and children who are legal immigrants with less than five years residency. The Kaiser Foundation has estimated that anywhere between 633,485 and 877,560 individuals will be added to NC Medicaid rolls by 2019 depending on federal and state outreach efforts.
How much will NC Medicaid expansions cost?
The NCMS provided information last year regarding the financial impact of the Affordable Care Acts Medicaid expansion in North Carolina (read Expanding Role of Medicaid, Bulletin, 8-20-10). Below are updated numbers to provide a clearer sense of the budgetary impacts of the Medicaid expansion to occur between the years of 2014 and 2019.
Source: Kaiser Commission on Medicaid and the Uninsured
- New NC Medicaid Enrollees by 2019: 633,485 877,560 depending on outreach efforts of state and federal government.
- Previously uninsured newly enrolled in Medicaid by 2019: 429,272 661,292 depending on outreach efforts of state and federal government. Costing state $811 million - $932 million.
- Total State expenditures on expansion: $ 1 billion $1.8 billion.
Am I Eligible for a Primary Care Bonus Payment Now?
Medicare is offering a primary care incentive payment from January 1, 2011 until January 1, 2016. In order to qualify you must meet the definition of primary care practitioner and perform primary care services as outlined in The Affordable Care Act. Payments will be made on a quarterly basis.
Section 5501(a)(2)(A) of The Affordable Care Act defines a primary care practitioner as:
- A physician who has a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine; or
- A nurse practitioner, clinical nurse specialist, or physician assistant for whom primary care services accounted for at least 60 percent of the allowed charges under the Physician Fee Schedule (PFS) for the practitioner in a prior period as determined appropriate by the Secretary of Health and Human Services.
Section 5501(a)(2)(B) of The Affordable Care Act defines primary care services as those services identified by the following Current Procedure Terminology (CPT) codes as of January 1, 2009 (and as subsequently modified by the Secretary of Health and Human Services, as applicable):
- 99201 through 99215 for new and established patient office or other outpatient Evaluation and Management (E/M) visits;
- 99304 through 99340 for initial, subsequent, discharge, and other nursing facility E/M services; new and established patient domiciliary, rest home (e.g., boarding home), or custodial care E/M services; and domiciliary, rest home (e.g., assisted living facility), or home care plan oversight services; and
- 99341 through 99350 for new and established patient home E/M visits.
- Any primary care provider meeting this definition will receive quarterly incentive payments equal to 10% of the reimbursement rate of eligible codes used.
What preventative care services are covered under Medicare in 2011?
Below is a list of some additional new preventive care services that are available to Medicare beneficiaries with no coinsurance requirements as of January 1, 2011. Section 4104 of the PPACA expands Medicare coverage to cover at 100% those preventive services recommended (rated A or B) by the U.S. Preventive Services Task Force.
Beneficiaries are not required to first meet their annual Part B deductibles before receiving these services or before physicians are compensated for providing the care.
The U.S. Preventive Services Task Force has given the following services an A or B rating:
- Abdominal aortic aneurysm screening for men (age 65 to 75)
- Alcohol misuse counseling
- Aspirin to prevent CVD for men (age 45 to 79) and women (age 55 to 79)
- Blood pressure screening
- BRCA screening, counseling
- Breast cancer preventive medication
- Breast cancer screening mammography for women
- Cervical cancer screening
- Cholesterol abnormalities screening
- Colorectal cancer screening
- Depression screening
- Diabetes screening
- Folic acid supplementation
- Healthy diet counseling
- Osteoporosis screening for women
- Sexually transmitted infection (STI) counseling and screenings
- Tobacco use counseling and interventions
View the full list of recommended services here
What credits and taxes might affect me and my practice?
The Affordable Care Act is funded through a number of taxes and fees collected from the health care sector, employers and some taxes on high-income individuals. With these fees come tax credits for small business owners which could include physicians in their roles as employers and as individual taxpayers. Below is a brief synopsis of the fees and credits that may impact you and your practice as the ACA reaches full implementation.
Individual Penalties and Subsidies
Employer Penalties and Subsidies
- Individual Mandate: Individuals must obtain minimum essential coverage for themselves and their dependents, effective 2014, with limited exceptions. Those without coverage will pay a tax penalty of the greater of $695 per year up to a maximum of three times that amount ($2,085) per family, or 2.5 percent of household income. The penalty will be phased in according to the following schedule: $95 in 2014, $325 in 2015, and $695 in 2016 for the flat fee; or 1.0 percent of taxable income in 2014, 2.0 percent in 2015, and 2.5 percent in 2016.
- Medicare Payroll Tax: Effective 2013, the Medicare Part A payroll tax will increase by 0.9 % on workers earning more than $200,000 and joint filers earning more than $250,000. In addition, a 3.8 % Medicare tax will be imposed on net investment income from interest, dividends, annuities, royalties, rents and taxable net gain for these same individuals.
- Deductions for Medical Expenses: Beginning in 2013, the threshold for claiming the itemized tax deduction for unreimbursed medical expenses will increase from 7.5 to 10% for those under 65. The increased threshold applies to individuals 65 years and older in 2017.
- Flexible Savings Accounts: Contributions are capped at $2,500 beginning in 2013.
Health Care Sector Taxes and Fees
- Employers of 50 or less are exempt from the requirement to provide health coverage.
- Large Employers: Beginning in 2014, Employers with over 50 FTEs that do not offer coverage and have at least one FTE who obtains coverage through an exchange and qualifies for an individual tax credit or subsidy will be assessed $2,000 multiplied by the number of full-time employees in excess of 30. If an employer offers coverage but has at least one employee who is entitled to a tax credit because the employers plan is too costly, the penalty is $3,000 for each employee receiving a credit or $2,000 for each full-time employee, whichever is less.
- Subsidies for Small Businesses: Small business tax credits will be available to employers with 25 or fewer employees with average annual wages below $50,000 if they purchase health insurance for their employees. For tax years 2010 through 2013, the credit can be up to 35% of the employers contribution toward the premium, provided the employer contributes at least 50% of the total premium cost. According to the IRS, the wages and hours of physician business owners and partners will not be counted in calculating either the number of full-time employees or the average annual wages.
- Medicare Part D: Effective 2013, employers that currently sponsor retiree prescription drug plans will no longer be able to deduct amounts contributed. However, future Medicare Part D subsidies will remain tax-free to the employer.
- Health Insurance Company Compensation: Effective 2013, the deduction for executive and employee compensation for health insurance providers is limited to $500,000 per applicable individual.
- Annual fee on Health Insurance Providers: Beginning in 2014 a fee will be applied to the net premiums of all health insurers based upon their share of the market. Assessments for non-profit insurers will be based upon half of their net premiums and those with high levels of government funding will be completely exempt from the fee. However plans who simply underwrite government programs will not be exempted.
- Annual fee on Pharmaceutical Companies and Medical Device Manufacturers: These fees will begin in 2011 and are based upon annual sales figures. Specific revenue targets are set for each year of implementation. By 2013, an annual 2.3 % tax will be placed on Class I medical devices by manufacturers, producers or importers. This includes most orthotics and prosthetics, as well as durable medical equipment. Eyeglasses, contact lenses and hearing aids are all exempted.
- Excise Tax on High Cost Health Plans: Beginning in 2018, a 40% excise tax will be imposed on insurers of high-cost, employer-sponsored health plans with aggregate values exceeding $10,200 for individual coverage and $27,500 for family coverage. Employers that make contributions to a health savings account (HSA) or medical savings account (MSA) must pay the excise tax if those contributions exceed the thresholds.
- Student Loan Tax Relief: Payments made under any state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health care services in underserved or health professional shortage areas will be excluded from gross income.
Do I have to report what drug samples my office receives?
Beginning on April 1, 2012 and annually thereafter, each manufacturer and authorized distributor of record of an applicable drug shall report the name, quantity and dosage of all drug samples given to physician offices as well as the date that the samples were provided (sect. 6004). The name, address, professional designation and authorized signature for the practitioner receiving the drugs must also be reported for all sample distributions. Manufacturers or distributors of record are also required to report any theft or losses of samples to the Secretary of Health and Human Services.
Under current law manufacturers and distributors are only required to make this information available to HHS if requested. In 2012 companies are required to begin proactively reporting the information which will be made available to the public.
It is important to note that under this section of the new law, the Secretary of Health and Human Services can require that any other category of information also be reported. It is uncertain if a formal rule-making procedure would be necessary to make such a change.
The Affordable Care Act does not seem to direct new requirements on individual physicians or practices to report information regarding drug samples. However, it is possible that the increased reporting requirements for manufacturers and distributors of drug samples may result in additional administrative obligations for medical practices.