Print Friendly, PDF & Email

The Affordable Care Act (ACA), passed in March 2010, has been implemented steadily over the past two years.[1]  Implementation of various provisions will continue next year and in 2013, with the core of the ACA – expanded health insurance coverage for nearly 30 million people – occurring in 2014.[2]

ThisAlert will review some of the important consumer-oriented provisions of the law that are already in effect and look at what is coming in 2012, with an emphasis on Medicare and Medicaid provisions.

2010 Implementation

Changes for Consumers

  • Increased age for dependent coverage of adult children.  Among the most touted – and earliest to be implemented – of the provisions effective in 2010 was the required increase to age 26 for private insurance coverage of adult children.  This provision allowed parents who had family coverage to continue to insure their adult children several years after the previously common cut-off date.
  • Coverage of Preventive Benefits.  The law requires new health plans to provide coverage without cost-sharing for preventive services rated as A or B by the U.S. Preventive Services Task Force.
  • Medicare Beneficiary Drug Rebate Program.  This provision, a precursor to the gradual elimination of the Medicare Part D coverage gap known as the donut hole, provided a one-time, $250 rebate to all Part D beneficiaries who entered the donut hole in 2010.
  • Medicaid Coverage for Childless Adults.  The law created a state option to expand coverage to childless adults with incomes up to 133% of the Federal Poverty limits (about $1,200/month for one person).  Such coverage will be required beginning in 2014.
  • Pre-existing Condition Insurance Plans (PCIPs).  Every state has a plan, operated by either the state or the federal government, to insure individuals who have been uninsured for at least six months due to a pre-existing condition.  In 2011, the federal government liberalized rules for the plans it operates in 23 states and the District of Columbia.  According to the Kaiser Family Foundation, about 18,000 people were enrolled in PCIPs in March 2011.[3]
  • Consumer Protections in Insurance.  These provisions prohibit certain insurance practices that harm consumers, including placing lifetime limits on the dollar value of coverage, rescinding coverage (except in cases of fraud), denying children coverage in general based on pre-existing conditions or denying coverage for specific pre-existing conditions in children.

Policy Changes

  • Comparative Effectiveness Research.  The law authorized a Patient-Centered Outcomes Research Institute to conduct research into the comparative effectiveness of various medical interventions.
  • Establishment of Office for Dual Eligibles.  This office, now called the Medicare and Medicaid Coordinating Office, was established to improve care for those Medicare beneficiaries who also have Medicaid and to promote more efficient and cost-effective methods of providing their care.  In its two years of operation, the MMCO has launched an alignment initiative to identify and address those areas where differences in Medicare and Medicaid law create problems for beneficiaries.  It has also promoted the development of integrated care initiatives by states, to more effectively coordinate and manage care for dual eligibles.  More than 40 states are engaged in the initiative at various levels of development.
  • Medicaid Community Based Services.  The provision offers states new options for providing community based services through their State Plan process.

2011 Implementation

Changes for Consumers

  • Closing the Medicare Drug Coverage Gap.  2011 is the first year of a multi-year phase out of the “donut hole” that requires Medicare Part D plan enrollees to pay the full price for their drugs after a certain threshold of coverage has been met and until a catastrophic limit has been met.  For 2011, beneficiaries pay only 50% of the cost of brand name drugs in the donut hole and 93% of the cost of generic drugs.
  • Medicare Preventive Services.  This provision requires Medicare to eliminate cost-sharing for Medicare-covered preventive services rated as A or B by the U.S. Preventive Services Task Force.  It also waives the Medicare deductible for colorectal screening and authorizes coverage for an individualized prevention plan.
  • Changes to Increased Medicare Premiums for Higher-Income Beneficiaries.  Since 2007, Medicare beneficiaries with incomes above a certain level have been required to pay higher Part B premiums.  The ACA froze the income level at which such premium surcharges apply at $85,000/year through 2019 and expanded the surcharge to also apply to Part D premiums.

Policy Changes

  • Medicare Extra Payments. For the years 2011 through 2015, Medicare will pay a 10 percent bonus for primary care services; it will also pay a 10 percent bonus to general surgeons practicing in areas with a shortage of health professionals.
  • Medicare Advantage (MA) Payment Changes.  Beginning in 2011, Medicare Advantage payments are restructured at an increasingly smaller percentage of original Medicare rates.  Prior to the restructuring, MA payments were, on average, 13% higher than those for traditional Medicare.[4]  Also beginning in 2011, MA plans are prohibited from charging higher cost-sharing than original Medicare for skilled nursing facility care, chemotherapy and kidney dialysis.
  • Center for Medicare and Medicaid Innovation.  The law requires the establishment of such a Center, with authority to test myriad innovative payment and delivery systems that improve outcomes and decrease costs, or improve outcomes without increasing costs, or decrease costs without worsening outcomes.  The Innovation Center has collaborated closely with the Medicare and Medicaid Coordinating Office to test models for improving care for dual eligibles.

2012 Implementation

  • Medicare Independence at Home Demonstration.  This provision creates a demonstration program to provide high-need Medicare beneficiaries with primary care services in their home.
  • Accountable Care Organizations (ACOs) in Medicare.  This provision of the law allows physicians and hospitals to organize with other health care professionals into voluntary organizations that can share with Medicare in savings generated from caring for certain Medicare beneficiaries if the ACOs meet designated quality standards.  Final regulations implementing the ACO program were published on October 20, 2011.[5]
  • Medicare Advantage (MA) Plan Payments.  The restructured payments that began in 2011 continue. Rebates paid to certain MA plans are also reduced.  In addition, MA plans with four or five stars on a five star quality rating system are entitled to bonuses.  The Centers for Medicare & Medicaid Services has expanded the bonus payment program to include plans with three stars.[6]
  • Medicare Value-Based Purchasing.  Beginning October 1, 2012, Medicare will pay hospitals based on their performance on certain quality measures and will move toward making such payments applicable to skilled nursing facilities, home health agencies and ambulatory surgical centers.
  • Reduced Medicare Payments for Hospital Readmissions.  Beginning October 1, 2012, Medicare will reduce payments to hospitals for preventable readmissions within 30 days.
  • Data Collection to Reduce Health Care Disparities.  Effective March 23, 2012, the ACA requires the collection and reporting of certain data on race, ethnicity, sex, primary language, and disability status.


The provisions described here are just a few of the most salient provisions of the ACA that become effective each year.  For more information about the ACA and its impact on Medicare, see the Center’s previous Alerts available at:


[1]As referenced in previous Alerts, Health Care Reform consists of two separate laws, the Patient Protection and Affordability Care Act of 2010 (PPACA), Pub.L. 111-148 (March 23, 2010), and the Health Care and Education Reconciliation Act of 2010 (HCERA), Pub. L. 111-152 (March 30, 2010). The laws often are collectively referred to as the Affordable Care Act (ACA).
[2] The Urban Institute, “America Under the Affordable Care Act” at (site visited Oct. 25, 2011).
[3] Kaiser Family Foundation Health Reform Source Implementation Timeline at (site visited Oct. 25, 2011).
[4] See, e.g., MedPAC Report to Congress: Medicare Payment Policy (March 2010) noting that in 2010, overall payments to plans average an estimated 113 percent of original Medicare fee-for-service (
FFS) spending; available at:
[5]  See:  The final rule is set for publication in the Federal Register on November 2, 2011.
[6]See CMS Press Release, November 10, 2010,  “Medicare Announces Quality Bonus Payment Demonstration for Medicare Health Plans” available at:

Comments are closed.