Bureaucratic Oath

Amid an ongoing political battle, HHS officials are managing to implement the massive health care law.

The stack of documents in the House Energy and Commerce Committee hearing room in June constituted "every regulation, notice and correction that the Obama administration has issued so far" on the Affordable Care Act, in the opening words of Health Subcommittee Chairman Joe Pitts, R-Pa. The congressman's staff counted 370 "Obamacare-related items" totaling 3,500 pages, "many of which were released as interim final rules, bypassing the traditional public comment period, and giving them the force of law," Pitts said.

Fellow Republicans at the hearing proceeded to blast the new law's "regulatory burden," saying it would force Americans into unwanted coverage and discourage employers from offering health plans. "I am shocked," cried Mike Rogers, R-Mich., who said the Health and Human Services Department is ignoring the "desperate economic situation for insurance agents and brokers who are being laid off" because of the new law. "We need you to get upset about it," he told a central figure in HHS' rollout of new mandates.

Alone at the witness table at the sparsely attended session was Steve Larsen, director of HHS' Center for Consumer Information and Insurance Oversight. Speaking calmly and stroking his goatee, Larsen said, "I appreciate your concern." But, he added, "we believe brokers will continue to play an important role." In prepared testimony, he recited how the law expands access to affordable, quality coverage to more than 30 million Americans, guarantees patient rights, eliminates exclusions for pre-existing conditions and covers adult children up to age 26. He ended by saying, "We are proud of all that we have accomplished."

Behold the dueling visions of the Herculean implementation of the landmark health care reform law. While Republicans in Congress pursue repeal or piecemeal defunding, 26 states and private groups continue their court battles over whether the mandate for individuals to purchase health insurance violates the Constitution's commerce clause.

Yet HHS officials are proceeding undeterred. When not being summoned to Capitol Hill to wage a rear-guard defense, they have fanned out to write regulations, launch programs, provide seed capital for innovations, and cultivate health care providers and product vendors to implement a singularly complex law in a singularly charged political environment.

"I haven't seen anything like this before, and it's a sign of our dysfunctional politics," says Norman J. Ornstein, resident scholar at the American Enterprise Institute. Republican efforts to undermine new insurance regulations, he says, lack "a sense of fiduciary responsibility to implement a law enacted in a legitimate process." And yet, he adds, "HHS is managing it well."

On May 27, 2010, HHS Secretary Kathleen Sebelius escorted her top team to a news briefing on applying the rules and benefits. She described the guiding principle as "giving the American people more control over their health care." She stressed keeping the public informed about changes in health care coverage. And she said was consulting HHS veterans on lessons from ramping up the Medicare Part D prescription drug benefit enacted in 2003.

By her side were Marilyn Tavenner, principal deputy administrator and chief operating officer of the Centers for Medicare and Medicaid Services; Jay Angoff, director of the Office of Consumer Information and Insurance; and Jeanne Lambrew, director of the newly created Office of Health Reform. Lambrew has since moved to the White House.

Noticeably, Sebelius did not bring Donald Berwick, who has since become the all-important CMS administrator. Berwick's July 2010 recess appointment inflamed Republicans who warned he would ration health care.

The rollout, under Berwick and Sebelius' command, aims to "be a constructive force for health care for all Americans," said Richard Gilfillan, acting director of the newly formed Center for Medicare and Medicaid Innovation, who spoke at a June medical industry conference in Washington. "The system will be transformed not from Washington or Baltimore but from the field," he said. "We know there is an alternative to cutting benefits; it's improving care."

If the movers of health care reform are rattled by the political attacks, they're not letting on. Congress "has been a great partner," Sebelius said tactfully just months after Republicans took control of the House. The issue is sensitive enough, however, that HHS staff, while providing Government Executive data for this story, declined to give interviews.

Scale of the Task

The projected costs of implementing the historic Patient Protection and Affordable Care Act-which contains more than 80 provisions dealing with quality and costs alone-have been as elusive as a diagnosis on TV's medical mystery show House.

The first month they took office, House Republicans issued a report warning about "$115 billion in new government spending required to implement the law." The Congressional Budget Office and the Joint Committee on Taxation in 2010 had put the figure between $5 billion and $10 billion over 10 years. More recently, the two scorekeepers said the additional funding would be needed.

HHS' fiscal 2012 budget called for $80 billion-a slight increase over 2010 levels-while packing in the costs for health care reform with standing major programs. It requested a staff increase of 350 on top of the 670 assigned to the initiative. When House Appropriations Committee Chairman Jerry Lewis, R-Calif., expressed skepticism at a hearing that tight fiscal times would permit much hiring, Sebelius replied that her cadre of 1,000-plus positions would, by comparison, be smaller than the insurance departments in Lewis' state of California.

Whatever the ultimate size of its army, HHS wasted little time in rolling out new regulations. The department's own review of its accomplishments cites 28 initiatives ranging from the patients' bill of rights, reviewing health insurance rate increases, fighting fraud, closing the "doughnut hole" gap in payments seniors receive for prescription drugs and ending excessive payments to insurers to empowering states to innovate.

Laying groundwork to make state insurance exchanges operational by 2014, the department in the past year has awarded planning and establishment grants of up to $1 million to 49 states.

As of May 1, HHS has issued 1,433 waivers to employers who say they cannot afford the required minimum expansion of health coverage for employees, a temporary policy that will halt in September. Some critics view the granting of waivers as favoritism and an admission that policies set to take effect in 2014 are not working.

On July 1, 2010, HHS launched HealthCare.gov, a website that showcases data from the department's Center for Consumer Information and Insurance Oversight. It has since attracted 6 million visits. The site provides social media and links to regulations, authorities and requests for content. It includes an interactive map of the United States offering state-specific information on services and programs. And it touts programs of special interest, such as which benefits of the new law apply to women, and a bit of advertising during June's Prevention and Wellness Month: "Find out how the health reform law is helping Americans stay healthy."

A special office is coordinating doctors' transition to electronic health records. That program underwent a setback this spring when its national coordinator for health information technology, David Blumenthal, returned to his teaching post at Harvard University. Such data tools also are seen as crucial to saving money, minimizing errors and encouraging health care providers to join accountable care organizations envisioned as a successor to health maintenance organizations.

As an investment in the future that has won $10 billion in appropriations, HHS also created the Center for Innovation. Over the next decade, the center will provide seed money and test strategies to improve the quality of health care while lowering costs.

HHS has pressed ahead seeking public comment on rules for controversial subjects such as the treatment of "dual eligibles" who can take advantage of health care under both Medicare and Medicaid through a program run out of a new coordinating office headed by Melanie Bella. And Sebelius took to the op-ed pages to defend the law's much disputed Independent Payment Advisory Board, a panel of experts who would present Congress with proposals for reducing medical costs.

Positive Reviews

"It's impressive the way they've turned things around pretty fast while doing their day jobs," says Jack Meyer, a professor of public policy and public health at the University of Maryland who has been writing regular reports on HHS' progress. "They're doing some remarkable things given their staff constraints."

Meyer takes special note of the agency's guidance for setting up the state insurance exchanges based on relationships with state authorities.

The idea is "to build a federal data hub that states can plug into in real time" to coordinate what programs are offered under Medicaid and the Children's Health Insurance Program. That means building out a Web portal in which a consumer can see several choices of local insurance plans side by side within 15 to 20 minutes. "This is a big deal, heavy lift," Meyer says.

Many lobby groups also are upbeat, though their comments are tempered by outstanding disagreements on specific policies. "The overwhelming amount of work involved in pumping out the regulations is amazing-we feel it here and have had to staff up," says Rick Pollack, executive vice president of the American Hospital Association. Given the controversy over the workability of accountable care organizations, Pollack notes that HHS has had to juggle work on three separate rules and to coordinate with the Justice Department, Federal Trade Commission and HHS Inspector General's Office. "The process is unprecedented," he says.

The insurance industry, which warns the law will raise costs, disrupt coverage and increase taxes on families and small businesses, is impressed with some of HHS' flexibility. "We appreciate that regulators have solicited feedback from stakeholders on how to implement the new health care reform law in a manner that will minimize coverage disruptions and cost increases for individuals, families and employers," says Robert Zirkelbach, press secretary for America's Health Insurance Plans. "While progress has been made to implement the initial [accountable care organization] provisions, the real test lies ahead when the most comprehensive and far-reaching reforms are implemented in 2014."

The American Medical Association praises the responsiveness of CMS, citing its recent decision to modify the e-prescribing penalty policy and allow physicians more flexibility. AMA President Peter W. Carmel said, "The AMA has continually emphasized to CMS the importance of these changes in ensuring successful physician participation in the e-prescribing program, and we are pleased to see them become a reality."

At least one relentless critic of the Affordable Care Act gave a nod to HHS' resolve in winning an intra-administration squabble with the Office of Management and Budget. On June 20, The Wall Street Journal editorial page jabbed that delays in the rule creating accountable care organizations were caused when "the HHS bureaucracy prevailed in its belief that it can run this brave new world via the Federal Register."

Some Setbacks

HHS no doubt has been aggressive in making the law visible to average citizens. As early as May 2010 it announced the first 80,000 of what by March 2011 was 4 million one-time checks to seniors to reimburse them for what they paid for pharmaceuticals after the closing of the doughnut hole.

Another example of playing to the grass roots was noted by columnist Wendell Potter in a May essay for the Center for Public Integrity. He watched in January as HHS officials at a conference "all but pleaded" with patients and consumer advocates to bombard the administration with messages demanding that the law be implemented as written and not altered to please lobbyists.

Mistakes in a task of this magnitude are inevitable. AEI's Ornstein says he was dismayed by President Obama's delay in nominating Berwick to head CMS. "Berwick's career was built on doing this, and it should have been obvious that this was key to implementing" the law, Ornstein says. He notes that Bush administration CMS chief Mark McClellan played a crucial role in what most agree was a smooth implementation of the Part D prescription drug benefit. McClellan is now directing the movement toward accountable care organizations for the Brookings Institution's Engelberg Center for Health Care Reform.

Berwick, despite his likely short-term status, has been on the hustings at conferences, defending, for example, the 400-plus page rule on accountable care organizations (which drew 1,200 comments) against attacks from some doctors and hospital groups.

In June, HHS canceled much- criticized plans to use "mystery shoppers" posing as patients to call physicians' offices around the country to gauge access to primary care.

And with the budget crisis, Congress could easily force HHS to scale back. A June report on the medical workforce from the American Public Health Association warned that only 11 of the law's 19 key workforce provisions to date had received funding, and many of them at reduced levels.

Rep. Henry Waxman, D-Calif., a chief defender of the law who at hearings has taken to redirecting questions to HHS witnesses after Republican attacks, says, "I have been pleased by the steps the administration has taken to end the insurance industry's worst abuses. I am confident that it will continue to implement the law in a way that will benefit American families-despite the efforts of the Republicans to thwart those efforts."

Meyer says some of the draft regulations "could be made less complicated." HHS officials "are more into micromanagement than I would like," he says. Meyer recommends they set targets and let the private sector arrive at solutions.


Up the Street at the IRS

Republican efforts to block the Affordable Care Act got rolling in March 2010 with a showstopping figure-16,500. That's how many workers the House Ways and Means Committee said the Internal Revenue Service would hire to enforce the law.

But the seemingly impossible challenge that critics of the new law have laid out on Capitol Hill has been little deterrent. A year later, the tax agency has actually lost 82 employee slots after Congress repealed a provision in the health care law that would have imposed new income reporting requirements on small businesses. But the IRS is proceeding apace with implementation, awaiting results of an Obama administration fiscal 2012 budget request for $473 million and 1,269 new positions.

In June, Commissioner Douglas Shulman told House appropriators that "the IRS seeks to be helpful to families and businesses that will benefit from the ACA." That includes making businesses, nonprofits and tax practitioners aware of the new health insurance credit-for starters, through 4 million postcards and 1,000 outreach events. The IRS also has worked to educate taxpayers on the law's expanded tax credit for adoptive parents, an exclusion in loan forgiveness programs for certain health professionals and a new excise tax on indoor tanning services.

Given such demanding assignments as setting up taxpayer access to the coming state health insurance exchanges and coordinating tax credits for individual coverage, the bulk of the IRS' new funding will go to information technology.

The service also is coordinating with the Health and Human Services, Labor and Treasury departments. On May 3, the IRS and Treasury solicited public comment on shared responsibility provisions of the law, which include helping employers determine who is a full-time employee and interpreting provisions limiting the ability of health plans to impose a 90-day waiting period.

The IRS also has designed a new W-2 form to reflect health care withholdings along with new small business claim forms. It has published online flyers and fact sheets explaining, for example, the law's changes to flexible spending accounts and adoption tax credits-written, for the most part, in plain English.

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