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Health Care Reform Provisions Affecting Older Adults and Persons with Special Needs

Health Care Reform Provisions Affecting Older Adults and Persons with Special Needs

(This is an article provided by the National Academy of Elder Law Attorneys and has been edited)

On March 23, 2010, President Obama signed a comprehensive health care reform bill (H.R. 3590) into law. On March 25, Congress passed the Reconciliation Act of 2010 (H.R. 4872) which modifies H.R. 3590. Taken together, these two bills comprise the health care reform package. Important provisions for older adults and people with special needs include:


  • Provides a $250 rebate to Medicare beneficiaries who reach the Part D coverage gap in 2010 (Effective January 1, 2010).
  • Gradually eliminates the Medicare Part D doughnut hole by 2020:
    • For brand-name drugs, requires pharmaceutical manufacturers to provide a 50% discount on prescriptions filled in the Medicare Part D coverage gap beginning in 2011, in addition to federal subsidies of 25% of the brand-name drug cost by 2020 (phased in beginning in 2013)
    • For generic drugs, provides federal subsidies of 75% of the generic drug cost by 2020 for prescriptions filled in the Medicare Part D coverage gap (phased in beginning in 2011)
  • Provides Medicare coverage, with no co-payment or deductible, of an annual wellness visit and creation of a personalized prevention assessment and plan. Prevention services include referrals to education and preventive counseling or community-based interventions to address risk factors.
  • Eliminates Part D cost-sharing for full-benefit dual eligible beneficiaries receiving home- and community-based services.
  • Restructure payments to Medicare Advantage (MA) plans by setting payments to different percentages of Medicare fee-for-service (FFS) rates.
  • These and other provisions strengthen Medicare and extend by nine years the life of the Medicare Trust Fund which was projected to be depleted in 2017.
  • Applies the Medicare tax to net investment income for individuals making $200,000 and over and couples making $250,000 and over.

Insurance Reforms

  • Effective six months after enactment, insurance companies can no longer deny children coverage based on a preexisting condition.
  • Starting in 2014, insurance companies cannot deny coverage to anyone with preexisting conditions.
  • Provides immediate assistance to individuals with pre-existing conditions through establishment of high-risk pools.
  • Ensures that minimum covered benefits include products and services that enable people with disabilities to maintain and improve function, such as rehabilitation and habilitation services and devices and mental health services.
  • Effective six months after enactment, requires insurers to offer and renew coverage for any applicant (guaranteed issue and renewal).
  • Effective six months after enactment, require individual and group plans to extend dependent coverage to adult children up to age 26, prohibit rescissions of coverage, and eliminate waiting periods for coverage of greater than 90 days.
  • Require group plans to eliminate lifetime limits on coverage and beginning in 2014, eliminate annual limits on coverage.
  • Requires the Centers for Medicare and Medicaid Services to collect data on beneficiaries with disabilities, access to primary care services and the level to which primary care providers have been trained on disability issues.


  • Expands Medicaid to cover individuals 64 and under with incomes up to 133 percent of the federal poverty line.
  • Increases federal Medicaid matching to all states (except expansion states) as follows: 100% in 2014, 2015, and 2016; 95% in 2017, 94% in 2018; 93% in 2019 and 90% thereafter to finance coverage for newly eligible individuals.
  • Increases the Medicaid drug rebate percentage for brand name drugs to 23.1 percent (except the rebate for clotting factors and drugs approved exclusively for pediatric use, which increases to 17.1 percent); increase the Medicaid rebate for non-innovator, multiple source drugs to 13 percent of average manufacturer price; and extend the drug rebate to Medicaid managed care plans.
  • Modifies the spousal impoverishment statute to mandate that states include the spousal impoverishment protections in their waiver programs, and that the spouses of all HCBS waiver participants, including those who qualify as medically needy, have the protections available. The provision will sunset after five years.
  • Extends the Medicaid Money Follows the Person (MFP) Rebalancing Demonstration program through September 2016. The MFP program was authorized in the Deficit Reduction Act of 2005 to encourage states to transition Medicaid enrolled individuals from nursing homes to the communities. The Medicaid coverage follows the person to the community and pays for the home and community-based services required.

Community First Choice Option

  • Establishes the Community First Choice Option, a state plan option under section 1915 of the Social Security Act to provide community-based attendant supports and services to individuals with disabilities who are Medicaid eligible and who require an institutional level of care. These services and supports include assistance to individuals with disabilities in accomplishing activities of daily living and health related tasks. States that choose the Community First Choice Option will be eligible for an enhanced federal match rate of an additional six percentage points for reimbursable expenses in the program. This provision sunsets 5 years after it starts on October 1, 2011.
  • The Community First Choice Option also will require data collection to help determine how states currently are providing home- and community-based services, the cost of those services, and whether states currently offer individuals with disabilities, who otherwise qualify for institutional care under Medicaid, the choice to receive home- and community-based services instead, as required by the U.S. Supreme Court in Olmstead v. L.C. (1999).
  • The Community First Choice Option also will modify the Money Follows the Person Rebalancing Demonstration to reduce the amount of time required for individuals to qualify for that program to 90 days.

Long-Term Care

  • Establishes the Community Living Assistance Services and Supports (CLASS) program, a new national long-term care insurance program funded through voluntary payroll deductions, which will provide a cash benefit to individuals who are unable to perform ADLs for the purchase of community living assistance services and supports. According to the Congressional Budget Office, the CLASS program will reduce the deficit by $70 billion over 10 years due to the payment of premiums by enrollees (the voluntary payroll deductions) in excess of benefits paid out in the first decade, and including federal Medicaid savings.
  • Creates the State Balancing Incentive Program (10/1/2011 – 9/30/2015) to provide enhanced federal Medicaid matching to states which currently spend less than 50 percent of total expenditures for long-term care on services in the home or community to increase their proportion of non-institutionally-based long-term care services.

Care Coordination

  • Creates the Independence at Home demonstration program to provide high-need Medicare beneficiaries with primary care services in their homes and allow participating teams of health professionals to share in any savings if they reduce preventable hospitalizations, prevent hospital readmissions, improve health outcomes, improve the efficiency of care, reduce the cost of health care services, and achieve patient satisfaction.
  • Creates an Innovation Center at the Centers for Medicare and Medicaid Services to test, evaluate, and expand different Medicare and Medicaid payment structures to foster patient-centered care and care coordination across treatment settings and slow cost growth.
  • Requires the Secretary of Health and Human Services to improve coordination of care for dual-eligibles through a new office or program within the Centers for Medicare and Medicaid Services.
  • Establishes a Medicare Shared Savings Program that promotes accountability for a patient population and coordinates services under Medicare parts A and B, and will encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery. It will allow groups of providers who voluntarily meet certain criteria to work together to manage and coordinate care for Medicare fee-for-service beneficiaries through Accountable Care Organizations (ACOs) under Medicare. ACOs that meet quality performance standards are eligible to receive payments for shared savings if costs are a certain percentage below a benchmark.
  • Establishes a national Medicare pilot program to develop and evaluate paying a bundled payment for an episode of care that begins three days prior to a hospitalization and lasts until 30 days following discharge.
  • Establishes a Medicaid demonstration project beginning January 1, 2012, and ending December 31, 2016 to evaluate integrated care around a hospitalization.
  • Creates a new Medicaid state plan option under which Medicaid enrollees with chronic conditions (including a mental health condition, substance use disorder, asthma, diabetes, heart disease, or weight problem) can designate a provider, team of health care professionals, or a health team as their health home.
  • Establish a program to provide grants to or enter into contracts with eligible entities to establish community-based interdisciplinary, interprofessional teams to support primary care practices.


  • No end-of-life provisions are included in H.R. 3590.


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