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HHS shifts new health insurance oversight office to CMS

Move could protect newly created office from Republican House appropriators who want to defund key parts of health reform law.

Just a few hours into the new House majority, evidence emerged of the Obama administration's efforts to temper Republican appropriators' potential impact on the implementation of the health care reform law.

Health and Human Services Secretary Kathleen Sebelius sent a letter on Wednesday to House Appropriations Committee Chairman Hal Rogers, R-Ky., informing Congress of the department's decision to move a new insurance regulatory office, created under the health care law and called the Office of Consumer Information and Insurance Oversight, from HHS to the Centers for Medicare and Medicaid Services.

Sebelius said the OCIIO shift happened because CMS has the "best resources, in terms of expertise and administrative processes, to achieve successful implementation." But it could also help protect the newly created office from Republican House appropriators who want to defund key parts of the law.

The insurance regulatory office is at the crux of the largest provisions of the health care law. It is tasked with enforcing new insurance market regulations, including rules requiring insurance companies to spend the large majority of premium dollars on medical care and determining if premiums are ultimately "unreasonable." The office is also responsible for establishing insurance exchange regulations and ultimately providing oversight to the exchanges.

Given OCIIO's key role in implementing and monitoring the overhaul effort, it is a top target for Republicans who want to dismantle the law by defunding implementation.

House Republicans have scheduled a vote on Wednesday to repeal the law in its entirety. Although they likely have the votes to send it to the Senate, the bill will die there. Key Republicans have said they will also pursue a plan to dismantle the law using all the tools at their disposal, including the power of the purse.

The vast majority of HHS' annual budget flows to CMS to pay claims for Medicare and Medicaid. In 2010, 85 percent of the $879 billion HHS budget went to fund both government health care programs. The large mandatory accounts under CMS could make it easier for administration officials to find funds for OCIIO in the CMS budget versus the HHS operating budget, giving the office greater protection from Republican appropriators.

But the move also gives OCIIO greater political cover. Republicans might be wary of cutting a large chunk of money from CMS, lest they be pegged for doing what they criticized Democrats for doing during the debate over the law-cutting the Medicare program.

An HHS official said the move is being made to streamline the agency by using existing structures instead of creating new bureaucracies. The department also announced Wednesday that the office in charge of implementing the long-term care provisions of the health care law would be moved into the Administration on Aging.