Government Shutdown. The first day of the federal government shutdown occurred on October 1, 2013.

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1 October 2, 2013 Government Shutdown The first day of the federal government shutdown occurred on October 1, I. HHS Operating Status Like most federal agencies, the Department of Health and Human Services ( HHS ) has implemented a Contingency Staffing Plan for Operations, which calls for 52 percent of HHS employees to be placed on furlough. 1 A. Medicare Reimbursement Despite the government shutdown, most Medicare fee-for-service reimbursement will continue as scheduled. On October 1, 2013, the Medicare Administrative Contractors ( MACs ) indicated they would continue to perform all functions related to Medicare fee-for-service claims processing and payment. According to the HHS contingency plan, however, healthcare fraud and abuse efforts will not continue during the government shutdown. Additionally, the Centers for Medicare & Medicaid Services ( CMS ) will be curtailing the number of recertification and initial surveys for Medicare and Medicaid providers. 1 While on furlough, federal employees are not able to volunteer to work for the government and even checking their work is a violation of federal law. Some parts of the federal government and some employees are not affected by a shutdown because they are supported by funding not tied to the annual appropriations process (e.g., mandatory spending). For additional information see, the Office of Personnel Management s Guidance for Shutdown Furloughs, available at 98 North Washington Street Boston, MA (617) Constitution Avenue NE Washington DC (202)

2 B. Medicare and Medicaid Provider Policies In addition to the establishment of the new health insurance exchanges, the ACA also mandated certain Medicare and Medicaid cuts to begin on October 1, 2013, including: Medicare readmissions reductions: Under the Hospital Readmissions Reduction Program ( HARP ) hospitals are assessed a penalty for patients with certain conditions who return to the hospital within 30 days of discharge. When the program began on October 1, 2012, hospitals were assessed a maximum penalty of one percent of total revenue. As of October 1, 2013, the penalty increases to two percent of total revenue. Medicaid Disproportionate Share Hospital ( DSH ) payments: The Medicaid program provides additional payments - DSH payments - to hospitals that see a higher than average share of low-income beneficiaries. The Affordable Care Act reduced the overall level of Medicaid DSH payments beginning October 1, 2013 when cumulatively states will receive a $500 million cut in DSH payments. C. Medicaid Expansion Under the Affordable Care Act, states that decide to do so may expand their Medicaid programs to cover uninsured individuals up to 133 percent of the federal poverty level. More than half the states have decided to expand their Medicaid programs, with expanded Medicaid coverage beginning in most states on January 1, II. Affordable Care Act Implementation October 1st marked the first day of open enrollment for the health insurance exchanges. Page 2

3 A. Affordable Coverage Options Data released by HHS last week shows consumers will be able to choose from an average of 53 health plans in the Federally-facilitated Marketplace, and the vast majority will have a choice of at least two different health insurance companies - usually more. Premiums nationwide will also be around 16 percent lower than originally expected with about 95 percent of eligible uninsured living in states with lower than expected premiums before taking into account financial assistance. Nearly 6 in 10 uninsured Americans could get insurance for $100 or less, with financial assistance and expanded access to Medicaid. As of yesterday afternoon, HHS informed reporters that more than 6.1 million people had visited the healthcare.gov website since that morning, with the call centers receiving more than 81,000 calls. HHS did not announce how many people had enrolled in a health insurance plan offered through the exchanges, though. B. Small Business Health Option Program HHS announced a delay in the availability of the Small Business Health Option Program ( SHOP ) at the same time it increased its education and outreach efforts for small businesses under the Affordable Care Act. Qualified small employers, generally employers with 50 or fewer full-time employees, may purchase health insurance through SHOP for their employees. The SHOP Marketplace for Federally-facilitated Marketplace states opens Oct. 1, 2013, when small employers can start the application process and get an overview of available plans and premiums in their area. Unlike individuals purchasing through the Marketplace, small employers can enroll in insurance plans through the SHOP on a monthly basis throughout the year. As such, some states are phasing in SHOP application and enrollment periods. All functions for SHOP will be Page 3

4 available in November and if employers and employees enroll by December 15, 2013, coverage will begin on January 1, C. Outreach campaign As part of the expanded education and outreach campaign, HHS will work with the Small Business Administration ( SBA ) to make additional resources available for small employers. The dedicated SHOP small employer call center at will offer extended hours Monday through Friday, 9 a.m. to 7 p.m. EST. This call center will also refer employers in states running their own SHOP Marketplace to the correct contact information for their state. SBA and HHS will also offer a new schedule of educational webinars tailored to educate small business owners across the country about what the SHOP offers, and how it works. According to HHS, it has trained over 40,000 agents and brokers, who will continue their traditional role of helping small businesses enroll in coverage, both inside and outside the SHOP Marketplace. D. Tax Credit Employers buying health insurance through the SHOP Marketplace may qualify for a small business health care tax credit to help defray their premium costs. Hundreds of thousands of small businesses with fewer than 25 full-time-equivalent employees have already received a tax credit of up to 35 percent of their contribution to employees health insurance premiums. Page 4

5 Beginning in 2014, this tax credit will be worth as much as 50 percent of the employer s contribution to premiums and will be available only to those purchasing coverage through the SHOP. * * * Detailed information on the SHOP application and enrollment process are available at A copy of the HHS Contingency Staffing Plan for Operations is available at This Committee Update provides general information and not legal advice or opinions Page 5