Making Sense of the Stimulus Healthcare Provisions
By now, you’ve probably become inundated with lengthy articles and summaries of the various provisions included in the American Recovery and Reinvestment Act of 2009 (also known as the Economic Stimulus Act), which was recently signed into law by President Obama. While the Act contains several items that will have far-reaching effects on group benefit plans, it can be difficult to make heads or tails of what these provisions will actually do. If you find yourself lost in all the hoopla, this summary of the stimulus healthcare provisions might be able to help you make sense of the whole thing:
COBRA, COBRA, COBRA
The most significant benefits-related provisions of the Act are probably those related to COBRA – especially the 65 percent premium subsidy for all individuals involuntarily terminated between September 1, 2008, and December 31, 2009. This subsidy, which will be administered through employers in the form of a payroll tax credit, is causing COBRA administrators all over the country to revise their reporting procedures, while charging employers with confirming eligibility of former workers.
To assure compliance with the Act’s provisions, employers should: (1) identify all employees terminated on or after September 1, 2008, and notify them of their rights under the Act; (2) update all notices and communications relating to COBRA with information about the subsidy; (3) check with current COBRA administrators regarding their own processes for compliance; and (4) prepare for administration and receipt of the subsidy.
The Act also provides for an additional 60-day election period for those who were involuntarily terminated between September 1, 2008, and February 17, 2009, but did not have COBRA coverage prior to February 17. Also, while the Act does not extend the maximum COBRA coverage period of 18 months from employment termination, it does include coverage extensions for Trade Adjustment Assistance and Pension Benefit Guaranty Corporation eligible individuals.
Incorporating Health Information Technology
Another significant benefits-related portion of the Act (from a dollar standpoint, at least) is the $19 billion investment package for health information technology (HIT), which includes $17 billion in incentives for Medicare and Medicaid as well as bonus payments for providers that adopt electronic medical records (EMR). HIT usage and advancement has been at the forefront of streamlining the healthcare industry, and has been discussed in earlier versions of Eyes on Benefits (see April 27, 2007 edition and July 3, 2008 edition). Basically, the Act will provide for development of national EMR standards, expansion of federal privacy and security standards for HIT, various incentives for early adoption of EMR-based systems, and penalties for physicians who refuse to adopt such systems. It also expands the current HIPAA patient health information privacy and security protections in relation to health information transferred electronically via HIT systems.
Comparative Effectiveness Research
In this era of wasteful spending on ineffective medications and healthcare practices, one of the more welcome provisions is that for head-to-head research to determine which drugs, devices, and procedures are most effective and carry the lowest risk. The idea behind this portion is to reduce spending on medications or other technologies that are only effective for a limited time frame and spur development of medications and technologies that are more effective in the long run. Having an independent body doing non-biased research in this area would not only produce valuable information that could help physicians in the U.S. treat their patients, but could also stem the flow of “medical tourists” who go outside the country for less costly and more effective treatment (See Eyes on Benefits, Nov. 21, 2008).
Medicaid Funding
The largest price tag in the healthcare stimulus package goes to the Medicaid funding portion, which provides for $87 billion in additional federal matching funds from October 1, 2008 to December 31, 2010. This is truly one of the most significant areas of need, as discussed in the Eyes on Benefits dated Jan. 30, 2009. The additional funding will go a long way toward addressing the surging enrollment in state Medicaid programs over recent years.
Other Provisions
The Act also provides $1 billion in funding for wellness and prevention programs, including immunizations and risk management strategies to address chronic disease rates – something that has become a major factor in reducing healthcare premiums. In addition, funding is provided for community health centers, the training of primary care providers, new research grants and construction of facilities for the National Institute of Health (NIH), and much more.
The amount of funding the Act provides for healthcare and benefits-related measures is a clear indication of how much the current administration values the improvement of our national healthcare system in relation to our country’s financial recovery. With such a unique opportunity to address all of these issues at once, we can only hope that the money is used wisely and efficiently, and that the caretakers of these funds act responsibly.
For more information about the stimulus healthcare provisions, please click on the links below…
American Medical Association Summary of Stimulus Healthcare Provisions
New England Journal of Medicine Report: Health Care and the American Recovery and Reinvestment Act
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Important Notice: Hill, Chesson & Woody does not engage in the practice of law, accounting, or medicine. Therefore, the contents of this communication should not be regarded as a substitute for legal, tax, or medical advice.
February 27, 2009
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