This analysis, prepared for the Institute of Medicine (IOM) Committee on Public Health Strategies to Improve Health, examines provisions in the Affordable Care Act (ACA) that present opportunities for public health agencies to support their activities to improve population health.
While insurance reform is the centerpiece of the ACA, in fact these provisions, along with many others, can be understood as a national blueprint for reorienting Americans toward a broader and deeper vision of health. No single section of the ACA holds all of the population health elements of the law; instead, the goal of improved health for all Americans pervades the legislation through an exceptionally wide range of strategies. Some of these strategies are aimed at infusing a greater prevention orientation into health care itself. Others represent policies that over time have the potential to improve health itself, empowering individuals and communities to make healthier choices and lead healthier lives. The National Prevention Strategy, whose creation was a requirement of the ACA (HHS, 2011a; National Prevention Health Promotion and Public Health Council, 2011), reflects this aim, and public health agencies have an important role to play in its realization.
Resources are key to public health agencies’ ability to play a central implementation role. Some of these resources may entail direct financial support for agency activities. Others can be thought of as derivative resources—that is, resources that will ultimately enable public health agencies to achieve the aim of population health, even if they do not flow directly through
agencies themselves. Because empowerment and regulation represent key functions of public health, it is important that public health agencies define what it means to receive support for their activities to include many support pathways, both direct and indirect. Doing so means that public health agencies must create seats at many tables, including tables involving the allocation of resources under the ostensible control of the private sector or other agencies. But because the ACA is prevention oriented, opening doors related to system design, oversight, and accountability may be easier than it has been in the past.
This analysis emphasizes certain provisions that have the potential to yield resources for population health goals and for public health agencies. Of special interest are provisions with implications for populations and communities that by virtue of income, age, place, disability, race, ethnicity, or language face an elevated risk for health disparities and poor health outcomes.
The first section reviews ACA provisions related to both health insurance coverage and care and identifies key implementation decisions that have the potential to yield public health resources (including a resource flow directly to public health agencies depending on how they are structured and operated). The resource flow from these provisions often may be indirect, since advances in the public’s health depend on empowerment, advocacy, and regulatory intervention (IOM, 2003a), it is important to identify these flows of funds whenever possible as strategic opportunities for public health. Indeed, how actively public health agencies are able to use these tools to reach beyond their own jurisdictional borders (that may be broad or narrow depending on the state) will help determine the full realization of the law’s preventive vision.
The second section focuses on two ACA provisions that bear more directly perhaps on financial support for public health agencies. The first is Community Transformation Grants. The second is the community benefit reforms to the Internal Revenue Code that apply to nonprofit hospitals that seek federal tax exempt status and that have implications for state tax exempt policy as well. These reforms should be considered as a pair because of their potential to strengthen and reinforce one another.
PUBLIC HEALTH AGENCIES AND ACA PROVISIONS
RELATED TO COVERAGE AND CARE
The establishment of a national system of health insurance lies at the heart of the ACA. When fully implemented, the law’s reform provisions are expected to result in coverage to between 92 and 94 percent of the
nonelderly population.1 The ACA’s protections are universal in nature. Nonetheless, it is fair to observe that the principal beneficiaries are both individuals and rural and urban communities2 facing an elevated risk of poor health outcomes, health disparities, and medical underservice. The ACA’s investment in these communities and populations is considerable: of the 32 million individuals expected to gain coverage under the act, 16 million are expected to qualify for Medicaid (CBO, 2010),3 while an estimated 80 percent of the 24 million individuals are qualified to purchase coverage through state health insurance exchanges also are expected to be eligible for premium tax credits (KFF, 2011b). In addition, the ACA makes direct investments through a major expansion of programs targeted directly into these communities such as the National Health Service Corps and community health centers (PPACA §§5207 and 5601; Health Care and Education Reconciliation Act [PL 111-152, 111th Cong. 2d sess.] §2303), two investments discussed at greater length below.
Given the relationship between health insurance resources and health system financing, the question of how this expanded coverage is implemented is a matter of critical importance to public health. In this regard, the ACA orients insurance reforms in a decidedly public health direction, with an emphasis on prevention and more effective and efficient management of serious and chronic conditions that affect population health. Under the ACA, certain clinical preventive services without cost-sharing must be made available on a population-wide basis.4 Furthermore, embedded in the definition of “essential health benefits”—which will define the scope of coverage in the individual and small group market, as well as for newly eligible Medicaid beneficiaries—is a strengthened orientation toward coverage for the management of serious conditions associated with health disparities (see Box B-1).
1The penetration rises if only citizens and legally present aliens are considered (see Letter from Douglas Elmsdorf to the Honorable Nancy Pelosi [CBO, 2010]).
2Nearly 100 million persons are residents of communities designated as medically underserved, while over 67 million live in areas designated as experiencing a shortage of primary health care professionals (Rosenbaum et al., 2009). Within these populations, 28 percent (a rate that exceeds twice the national average for the U.S. population) are uninsured. Being uninsured is closely associated with low family income and elevated risk for reduced health. The community health impact of an extensive lack of coverage has been documented by the IOM (2003b).
3See letter from Douglas Elmsdorf to the Honorable Nancy Pelosi (CBO, 2010).
4PPACA §1001 adding PHSA §2713; PPACA §1563(e) adding ERISA §715 and extending preventive provisions to all employer-sponsored health plans governed by Employee Retirement Income Security Act (ERISA), whether insured or self-insured. Grandfathered plans satisfying federal standards applicable to the preservation of grandfathered status are exempt. PPACA §1251.
ACA Coverage: Provisions Related to
Public Health Agency Activities
Preventive and wellness services (no cost-sharing)
• Evidence-based items and services with an “A” or “B” rating from the U.S. Preventive Services Task Force
• Immunizations recommended by the Advisory Committee on Immunization Practices
• Evidence-informed preventive care and screenings for infants, children, and adolescents recommended in Health Resources and Services Administration (HRSA) screening guidelines
• Preventive care and screenings for women recommended in comprehensive HRSA guidelines
Public health-related diagnostic and treatment services included in the essential health benefit package (cost-sharing support for low-income individuals and families)
• Chronic disease management
• Pediatric services including oral and vision care
• Maternity and newborn care
• Mental health and substance abuse disorder services
Health Insurance Exchanges
States are in the process of establishing health insurance exchanges that will serve as a central entry point into coverage for individuals eligible for Medicaid, the Children’s Health Insurance Program (CHIP), and tax credits, as well as small employers. How states design their exchanges, how exchanges are governed, the ground rules set by states for qualified health plans, and the steps states take to prevent adverse selection against the exchange market will determine the quality and affordability of coverage for low- and moderate-income families as well as small employers. In short, establishing and operating an exchange raises a broad array of policy considerations for public health agencies.
An exchange can be a governmental or nonprofit entity, and the expectation is that governance and advisement will be provided by a broad representative body. Because exchange design and operations will have a
significant impact on accessibility to historically underserved populations with elevated health risks, an important issue will be whether public health agencies can bring their expertise to bear through exchange governance and oversight activities. Governance of the exchange will reach all of the major decisions that ultimately determine the accessibility, quality, continuity, and stability of coverage
• Population outreach,
• Simplified enrollment into health plans in a culturally appropriate manner,
• The accessibility of health information in the range of languages that are spoken,
• Ease of access to subsidy determinations and a simplified determination process,
• Standards for qualified health plans,
• Health plan performance and oversight and monitoring, and
• The availability of public information about plan performance.
As of June 2010, 10 states had enacted exchange legislation,5 with legislation pending in 12 additional states (CBPP, 2011).6 An important step is the involvement of public health agencies in exchange governance, as well as service on committees established by an exchange to tackle critical implementation matters. Public health agencies also will be important sources of technical support for exchange regulatory and oversight operations, particularly in the design of qualified health plan certification standards, standards governing exchange navigator programs, the identification of key population health issues of special importance to an exchange when evaluating the capabilities of qualified plans, and the analysis of performance data across multiple plans.
Certification Standards for Qualified Health Plans
Exchanges may make health plans available only if certified as “qualified health plans” (PPACA §1311[d]). Federal law establishes basic standards for qualified health plans (e.g., coverage of essential health benefits, state licensure, offering both silver and gold levels of coverage in the exchange, and uniform cross-market pricing) (PPACA §1302[a]). But state exchanges may establish additional certification standards and furthermore may select among qualified health plans rather than allowing participation
5California, Colorado, Connecticut, Hawaii, Maryland, Nevada, Oregon, Vermont, Washington, and West Virginia.
6Alabama, Illinois, Indiana, Maine, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, and Washington, DC.
by all plans that technically qualify (PPACA §1311[d]). Given their expertise in clinical preventive care for at risk populations and chronic disease management, public health agencies play a potentially important role in helping shape qualified health plan certification standards in seven key areas
1. The evidence-based practice guidelines for prevention and wellness services that plans will be expected to use,
2. Whether plans make available enabling services such as translation and transportation,
3. The composition and capabilities of plans’ provider networks, particularly in the case of plans operating in medically underserved communities,
4. The network incorporation of “essential community providers” (PPACA §1311 [c][C]),7
5. Making available to public health agencies clinical data as well as the results of performance measurement activities so quality can be measured and population health can be monitored on a cross-plan basis,
6. Plans’ use of value-based coverage design,8 and
7. Provider performance payment incentives that encourage providers to practice in the most efficient manner possible.
An additional and important area of public health focus would be participation of qualified health plans across all markets in which subsidies (e.g., Medicaid, CHIP, and premium tax credits), in order to ensure that income fluctuation does not result in forced disenrollment from a health plan and interruption in continuity of care. (Over the course of a year, 50 percent of nonelderly adults with incomes under 200 percent of the federal poverty level can be expected to shift between Medicaid subsidies and exchange premium tax credits and back again [Sommers and Rosenbaum, 2011].)
State Benefit Mandates
Under the ACA, states may require qualified health plans to offer benefits required under state benefit mandates that fall outside of the federal
7Federal law defines essential community providers as providers that serve “predominantly” low-income medically underserved individuals and requires the secretary, in implementing rules, to establish basic network inclusion standards. A state may add to these standards, which are framed as “minimum” standards. At a minimum, essential community providers include providers that are recognized under the Section 340(B) discount prescription drug program (Section 340B[a]) of the Public Health Service Act and Medicaid’s drug rebate discount program.
8Of particular importance will be nominal cost-sharing for health maintenance activities such as medication adherence.
essential health benefit categories. States that elect to require these additional benefits will be required to subsidize their incremental premium cost (PPACA §1311[d]). An important implementation question will be determining whether certain state-mandated benefits fall outside the scope of essential health benefits (once federal regulations are issued) and yet are of sufficient importance to merit coverage and additional supplementation as a population health matter. Given their preventive and chronic care expertise, as well as their knowledge of health disparities, public health agencies bring important expertise to bear on the question of whether certain additional state benefits should be incorporated into qualified health plan benefit design.
The ACA requires states to finance navigators as part of their exchange operations (PPACA §1311[i]) in order to assure that eligible individuals and families are linked to coverage and empowered in its appropriate use. Public health agencies, using their expertise in population health and health disparities and their knowledge of health and risk communication, can play an important navigation role at several critical junctures. The first is outreach to eligible families and individuals and enrollment assistance in the appropriate form of financial assistance in relation to family income (e.g., exchange advance premium credits, Medicaid, CHIP, and other state subsidy programs). The second is providing ongoing support to assure that individuals and families promptly report changes in income that might affect the source or level of subsidy they receive in order to avert the loss or reduction in subsidies and the possibility of recoupment liability for improperly paid premium credits, which can be as high as $600 for a low-income family.9
A third support activity focuses on selection of a health plan and counseling on the effective use of coverage related to wellness, preventive clinical care, and disease management. A fourth is member and patient education regarding the development of strong and stable relationships with network primary health care providers, effective care-seeking practices, avoidance of medical emergencies in the case of ambulatory care-sensitive conditions, and self-empowerment health practices such as diet and exercise. (Patient education practices might be funded through navigation support as well as through health plan payments to health agencies for health education services.)
9The maximum recoupment amount for persons with family incomes under 200 percent of the federal poverty level was increased to $600 by PL 112-9, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (112th Cong., 1st sess.).
Internet Portal Design and Operation
All health insurance exchanges will be required to maintain Internet portals (PPACA §1311[d][C]) that offer standardized information about health plan offerings. Public health agencies potentially play a significant collaborative role in the portal design and content, particularly in the range of consumer and patient information to be made available through a portal. An important focus would be the development of guidance for individuals and families on preventive and health management considerations in plan selection and additional guidance in plan selection for consumers with elevated health risks. Similarly, health agencies possess expertise in assuring that health information is presented in a culturally appropriate manner and with due consideration regarding consumers’ level of health literacy.
Health Plan Network Adequacy and Use of Essential Community Providers
Qualified health plans must be able to demonstrate the accessibility of their provider networks as well as their use of essential community providers (in accordance with federal standards that will govern the inclusion of such providers in plan networks) (PPACA §1311[c]). Because of their familiarity with community health systems and health care seeking patterns among the population, health plans’ consultation to exchanges on how to measure plan network adequacy can be crucial. For reasons related to both moral hazard and adverse risk selection, health plans may resist inclusion of certain crucial providers such as family planning programs, school-based clinics, clinics operating mobile homeless units, clinics serving migrant farmworkers, and clinics located in public housing projects, to name only a few such examples. Without clear anchoring in community health systems, it is possible that coverage will translate into very little in the way of care improvement. In the same vein, public health agencies may play an important role in identifying such providers and working with them to enable their readiness to be network participants.
Preventive Care for Traditional Beneficiaries
In a preventive benefits context, the ACA creates two groups of adult beneficiaries: (1) newly eligible beneficiaries whose coverage consists of “essential health benefits” encompassing preventive services enumerated under the Public Health Service Act (PPACA §1001 adding PHSA §2713)(i.e., the U.S. Preventive Services Task Force [USPSTF] A and B benefits; Advisory Committee on Immunization Practices [ACIP]-recommended im-
munizations; and HRSA-recommended screening and preventive services for women, infants, children and adolescents); and (2) traditional Medicaid beneficiaries (i.e., those eligible for coverage prior to the ACA expansion) who remain entitled to Medicaid’s traditional benefit package. Preventive services are a federal requirement in the case of traditional beneficiaries under age 21 as a result of Medicaid’s Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefit but prevention is an option for traditional beneficiaries ages 21 and older (42 U.S.C. §§1396a[a][10(A) and (a)(13)]).
The ACA incentivizes but does not mandate the addition of preventive services for the traditional adult Medicaid population; instead, the law authorizes a one-point Federal Medical Assistance Percentages (FMAP)increase for states that elect to cover USPSTF A and B procedures or ACIP-recommended vaccines (PPACA §4106).10 (No comprehensive study compares current state Medicaid practice against USPSTF A and B rated items or ACIP-recommended immunization services for adults.) However, anecdotal evidence suggests that important preventive procedures and immunization services may be lacking in some states. Upgrading Medicaid preventive services for adults is an area in which public health agencies might play an important technical support role, evaluating existing coverage and payment practices within their states, proposing modifications and prioritization recommended, and recommending the use of modified clinical practice guidelines in the case of patients at risk for medical underservice (for example, allowing payment for preventive services furnished in certain community settings such as group homes for persons with mental disabilities). Under existing Medicaid policy related to payment for administrative services of skilled medical professionals, this type of activity presumably would qualify for enhanced federal payment at a 75 percent federal contribution level.
Tobacco Cessation for Pregnant Women
Effective October 1, 2010, the ACA makes tobacco cessation services a required benefit for pregnant women,11 defining such services as diagnostic, therapy, and counseling and pharmacotherapy (both prescription and nonprescription treatments approved by the Food and Drug Administration [FDA] for use with pregnant women) in accordance with Public Health Service guidelines. Services can be furnished by or under the supervision of
10The special Medicaid incentive does not reach HRSA-recommended child and adolescent services or women’s health services, presumably because EPSDT and family planning benefits (including preventive exams) already are required services for all traditional children and pregnant women.
11PPACA §4107 adding SSA §§1905(a)(4)(D) and ACA §4108.
a physician or by any other health care professional authorized to furnish such care and receive payment, and cost-sharing prohibitions apply.
Health departments can play an important role in benefit design and implementation, both through direct services to women as well as in counseling and supporting obstetrical care providers in the adoption of such coverage. Health departments might also carry out data collection activities for Medicaid agencies aimed at documenting participation by women, adherence of providers to prescribed treatment regimens and guidelines, and measuring and linking participation to health outcomes through vital statistics data.
Incentives for Preventing Chronic Disease
The ACA authorizes the secretary of HHS to award grants to states to develop chronic disease initiatives for Medicaid beneficiaries (ACA §4108). Section 4108 of the ACA authorizes the secretary to extend grants to states for incentives aimed at motivating Medicaid beneficiaries to successfully participate in chronic disease prevention initiatives. The grant program began January 1, 2011, or whenever the secretary develops program guidelines, and allows support to states for 3 years (SAMHSA, 2010). Programs developed under the initiative must be “comprehensive, evidence-based, widely available, and easily accessible” and must be “designed and uniquely suited to address the needs of Medicaid beneficiaries” with a “demonstrated success in helping individuals achieve” tobacco cessation, weight control, lowering cholesterol and blood pressure, and avoiding diabetes onset or managing diabetes (PPACA §4108 [a][A]). Programs also may address related co-morbidities. Statewideness requirements normally applicable to Medicaid can be waived. In establishing such a program, states may “enter into arrangements with providers participating in Medicaid, community-based organizations, faith-based organizations, public–private partnerships, Indian tribes, or similar entities” (PPACA §4108 [a][D]).
States awarded grants must conduct outreach and education campaigns to raise beneficiary awareness and must develop and implement systems for tracking participation and measuring changes in health risk and outcomes using clinical data as well as validated evidence of changes in beneficiary behavior and risk. States also are expected to “establish standards and health status targets” (PPACA §4108 [d]) for participants and measure whether their programs meet such targets and standards. States are further required to submit semi-annual reports regarding use of grant funds, assessment of “program implementation and lessons learned,” (PPACA §4108 [B]) assessment of “quality improvements and clinical outcomes,” (PPACA §4108 [C]) and cost-savings estimates. Incentives furnished to participating beneficiaries cannot affect their entitlement to coverage or eligibility for benefits.
The incentives program represents an important opportunity for partnership between public health agencies and Medicaid programs. This partnership can take a limited form (e.g., evaluation only) or can be more comprehensive, including the design of the program, selection of participating providers and entities, program administration, and collection, analysis, and reporting of results, including analysis of important longer-term policy implications for coverage of preventive interventions as a general Medicaid benefit at the end of the demonstration period.
Family Planning Coverage
The ACA creates a new state eligibility option related to coverage for family planning services and supplies.12 Under this option, states may extend coverage to certain individuals who otherwise are ineligible for Medicaid for categorical reasons, financial reasons, or both. Because a number of states have experimented with this eligibility option under special §1115 demonstration authority and the coverage has been found to be cost-effective, the ACA amends the law to permit states to proceed to implement such coverage as a matter of state plan discretion and without federal demonstration waiver authority. The new eligibile group consists of men and women who are not pregnant and whose income does not exceed a state’s established eligibility level (the highest income level for pregnant women under Medicaid and CHIP in the state). To the extent that this group includes women and men who will become eligible for more comprehensive Medicaid coverage in 2014, taking this option will not affect a state’s eligibility for the higher federal Medicaid payments that come with the expanded Medicaid eligibility standards that are mandatory under the ACA as of January 2014.
Benefits under this option consist of family planning services and supplies (for which the special family planning 90 percent federal payment rate is available) as well as “family planning related services,” which consist of diagnosis and treatment services that are provided pursuant to a family planning service and in a family planning setting. Examples would be
• Drugs to treat sexually transmitted diseases (STDs)13 discovered during a routine visit;
• Follow-up rescreening visits;
• Drugs to treat lower genital tract disorders and skin infections, as well as urinary tract infections discovered during a routine family planning visit;
• Immunizations to prevent cervical cancer; and
12PPACA §2303 amending Social Security Act §§1902 and 1905.
13Excluding HIV/AIDS and hepatitis.
• Other medical diagnosis, treatment, and preventive services routinely provided during a family planning visit and in a family planning setting.
Because family planning visits take place in clinics that specialize in family planning as well as clinics that may offer a more comprehensive range of primary health care services (e.g., a community health center) the concept of what is “routinely” provided during a visit and in a family planning setting may vary with the setting.
The family planning option offers public health agencies the opportunity to reach a far greater proportion of the low-income and at-risk population, extending Medicaid coverage to men and women with incomes well above standard eligibility levels or who otherwise would not fall into a Medicaid coverage category. A public health agency might collaborate with a Medicaid agency in numerous ways: the development and submission of the state plan option, the design of the special benefit package, the identification of family planning providers that might participate in an expanded program, outreach to eligible populations and enrollment,14 the dissemination of practice guidelines, the performance measurement and monitoring, the design of payment incentives to promote evidence-driven practices, and the collection and publication of performance information and information on health outcomes.
Patient Safety, Health Care Quality, and Population Access
The ACA contains extensive provisions aimed at nudging the health care system toward prevention and efficiency. Multiple provisions building on an array of federal laws under the Public Health Service Act and the Social Security Act aim to improve patient safety by using multiple techniques:
• Increased standardization of patient care through development and dissemination of practice guidelines,
• Greater transparency and accountability through expanded reporting and disclosure of performance and adverse events,
• An investment in safer practice through comparative effectiveness research,
• Performance-based payment, and
• Greater coordination and integration of care (Furrow, 2011).
These incentives show up in portions of the law amending Medicare
14Presumptive eligibility is also a state option, permitting enrollment at the site of care while a full application is pending.
and Medicaid, as well as in legislative provisions establishing state health insurance exchanges and setting forth minimum standards for qualified health plans. These changes are in addition to the health information technology reforms contained in the American Recovery and Reinvestment Act (PL 111-5, Title XIII), which incentivize the adoption and meaningful use of health information technology and electronic health records.
A key question is how public health agencies might best position themselves to play an integral role in such change. Agencies could seek to establish themselves as a multipayer source of information on best practices in patient safety and system transformation, playing a type of clearinghouse and technical support function for both public and private payers and community health practices. Health agencies might receive financial support from state Medicaid agencies to provide assistance to clinicians transitioning to the adoption of health information technology (HIT) and meaningful use of HIT. Similarly, health agencies might collect, synthesize, and report on information reported to Medicaid agencies by meaningful users. Public health agencies might develop reporting systems that compile and present publicly available health care performance and patient safety information related to Medicare and Medicaid, with links to performance information made available at exchange websites when functional. Public health agencies might collaborate with community providers to develop medical and health home capabilities and could provide data warehousing and analytic capabilities. Agencies also could disseminate practice guidelines as they emerge, particularly guidelines of special relevance to high-risk populations.
A related question is how public health agencies align their own patient care activities and practices with this deep health system transformation while continuing to play their central role in assuring care on a population-wide basis. Even in the wake of health care reform, an estimated 8 percent of the population (approximately 24 million people) will remain uninsured and in need of affordable and continuous health care (Hall, 2011). In addition, the expansion of health insurance cannot alone remedy the extensive problem of medical underservice, a reality underscored by Massachusetts’ primary health care shortage experience in the wake of its enactment of universal insurance.15
Dual enrollees (elderly and disabled persons eligible for both Medicare and Medicaid) represent a group deserving of special attention by public health agencies and community partners engaged in broad health system reform. More than half the dual enrollee population lives in poverty and is in fair to poor health, figures twice as high as beneficiaries enrolled in Medicare alone (KFF, 2011a). This population bears a particularly high burden
15See, e.g., Massachusetts Medical Society (2010) noting intensification of shortages in preceding 3-5 years, particularly in the primary care fields, and Ku et al. (2011) reporting on nationwide shortages of primary health care, including Massachusetts.
of poor health, and the health and social risks they face are considerable. The ACA offers tools of great importance for this population, including an expansion of preventive services,16 new tools and strategies for better organizing systems of care for this population through Medicaid (PPACA §§2703 [health homes] and PPACA §§2704 [integrated health care around hospitalization]), and through new pilots developed by the Center for Medicare and Medicaid Innovation (CMMI) (PPACA §3021). A focus on access, equity, and safety for this population goes beyond being a matter of patient-focused health quality and rises to the level of a population health imperative because of the disproportionate levels of illness and disability concentrated within the dual enrollee population and also because of the enormous costs associated with their care.
Of particular importance in resolving issues of access, quality, safety, efficiency, and system transparency for medically underserved populations will be public health agency leadership and collaboration with entities that share their broad mission: community health centers; public hospitals; family planning agencies; teaching health centers created by the ACA and eligible for grants and subsidies to train primary health care professionals in community settings (PPACA §5508)17; and nonprofit hospitals with community benefit obligations (discussed at greater length below) and at financial risk for avoidable readmissions. These organized systems may also be designed to incorporate other specialized activities made possible through special grant funding, such as personal responsibility education, maternal and infant home visiting, and services for women experiencing postpartum depression (PPACA §§2951-2953 [maternal and infant home visiting, services for postpartum depression, and personal responsibility education]).
Through joint planning along with a strategic approach to resource
16PPACA §4103 (annual wellness visit and personalized prevention plan); PPACA §4104 (removal of cost-sharing barriers to preventive services under Medicare); PPACA §3111 (payment for bone density tests); Health Care and Education Reconciliation Act of 2010 (HCERA) §1101 (closing Medicare “donut hole”).
17PPACA §5508 authorizes the establishment of teaching health centers. HRSA guidance provides that eligible entities include community-based ambulatory patient care settings that operate (as opposed to simply participate in) primary care residency programs. While the operational requirement acts as a limiting factor on broad community-based care involvement, numerous community-based care programs partner with residency training programs, and partnerships (in HRSA’s words, “central” partnership) are essential to qualification for designation as a teaching health center. The training site must be “the primary recipient” of the graduate medical education payments made available under the law. The community program also must maintain operational responsibility over the program. Payments for this special graduate training activity initially are set at $150,000 per resident annually, including both direct and indirect funds. As used under the law, entities eligible for partnership with residency programs include (but are not limited to) federally qualified health centers, community mental health centers, rural health clinics, and family planning agencies receiving funding under Title X of the Public Health Service Act (HHS, 2011b).
deployment, public health agencies might assume a leadership position in the alignment and integration of available resources (including their own prevention, treatment, and health education grant funding) into more comprehensive health care enterprises capable of reaching uninsured and underserved patients with elevated health risks and designed to emphasize practice efficiency and prevention, evidence-based performance, the full integration of electronic health records with public health agency reporting capabilities, and public reporting capabilities. Community benefit funding as well as health center expansion funds for affiliation activities represent potential sources of investment to help build these advanced practice models of care and public health accountability. Many of the patients served in such settings ultimately will be eligible for Medicaid or exchange coverage; and other sources of public funding and community benefit resources may help defray the cost of care for the uninsured.
In sum, public health agencies are positioned to play a central role in the translation of health system reform and patient safety into integrated delivery systems serving medically underserved populations.
COMMUNITY TRANSFORMATION GRANTS
AND TAX-EXEMPT HOSPITAL POLICY
Two population health-related reforms are of special interest because of their potential to yield important investments in broader population health activities. The first is community transformation grants; the second is reforms in federal tax law aimed at generating greater community-wide accountability on the part of nonprofit hospitals.
Community Transformation Grants
The ACA establishes the Community Transformation Grant (CTG) Program (PPACA §4002), which has been implemented by the Department of Health and Human Services (HHS) in two parts: Community Transformation Grants and a National Network.
Community Transformation Grants are to be awarded to state and local governmental agencies, tribes and territories, and national- and community-based organizations. The purpose of the program is to “support the implementation, evaluation, and dissemination of evidence-based community preventive health activities to reduce chronic disease rates, prevent the development of secondary conditions, address health disparities, and develop a stronger evidence base for effective prevention programming” (CDC, 2011a). As implemented by the Centers for Disease Control and Prevention (CDC), the program will support up to 75 communities across the country over a 5-year time period, with projects increasingly expanding
their scope and reach “as federal resources permit.” Funding is available for “capacity building” or implementation awards, and activities must grow out of an area health assessment.
Under CDC guidelines, the CTG program focuses on (1) tobacco control; (2) active living and healthy eating; (3) evidence-based quality clinical and other preventive health services, specifically the prevention and control of high cholesterol and high blood pressure; (4) social and emotional wellness and mental health care access, especially for persons with chronic conditions; and (5) healthy and safe physical environments.18 Priority is placed on the prevention and reduction of type 2 diabetes and the control of high blood pressure and cholesterol. Clinical preventive services are embedded in the basic structure of the CTG program, making health care providers a core partner in the types of broad-based coalitions whose involvement is essential to the program. All applicants are expected to focus on tobacco-free living, active living and healthy eating, and increased use of high-impact quality clinical preventive services. Applicants also may choose to address social and emotional wellness and a healthy and safe physical environment.
The National Network is aimed at community-based organizations that are positioned to accelerate the speed with which communities adopt promising approaches to health transformation. Under the award program, National Network members can carry out this dissemination activity in two ways: first, by disseminating “CTG strategies to their partners and affiliates;” and second, by supporting and funding subrecipients “to initiate change and implement CTG strategies at the local level” (CDC, 2011b). Recipients of awards that include a subrecipient component are expected to support their subrecipients by helping them create leadership teams, identify “1-3 targeted policy, environmental, programmatic, and infrastructure strategies,” create and participate in a “structured Action Institute,” and provide technical assistance and guidance (CDC, 2011b).
Together, the CTG program and its National Network companion share a set of simple yet profound purposes
• To launch multiple interventions whose goal is to make fundamental improvements in population health,
• To lessen the burden on the health care system while achieving its central involvement in the effort,
• To develop a new approach to the collection and use of public health information in order to bring an immediacy and action orientation to longstanding surveillance practices, and
18Under the statute, worksite wellness promotion activities also are identified, but this is not listed as a CDC priority (42 USC §300g-13[c] as added by PPACA §4201).
• To speed the rate at which public health innovations are replicated nationally, regardless of whether the replication sites receive CTG support.
In this sense, the CTG program can be thought of as the public health counterpart to the CMMI, whose mission is to test and speed the acceleration of health care system transformation. As with the CMMI, the CTG program has been conceptualized as an incubator whose sum is larger than its parts. The CMMI is structured to stimulate transformational activities on a multipayer basis; similarly, the CTG program is intended to stimulate multisector population health investments that take direct aim at the risk factors most responsible for death and disability in the United States: weight, poor nutrition, inadequate physical activity, use of tobacco, and emotional well-being and mental health.
Paradoxically, but not surprisingly given the ACA’s length and complexity neither incubator program references the other, although one can imagine numerous types of interactions. For example, CMMI pilots to bring greater efficiency and quality to health care might be launched in communities that have received CTG awards and in which the National Network activities are strong. In this way, patients receiving care through a funded CMMI19 innovation site (such as team-based care for persons with serious and chronic illness and disability) might also participate in CTG initiatives in the community that are designed to improve overall mental health and wellness by promoting healthy eating and physical activity for persons with disabilities. National Network partners focused on the health and well-being of persons with disabilities could, in turn, disseminate the “twinned” model to other communities.
Given the ambitious reach of the CTG program, its long-term success depends on more than a successful effort on the part of public health agencies and their partners to conceptualize and undertake a successful intervention in a single community. Rather, success in this context depends on the ability of public health agencies to build partnership coalitions that include all of the system stakeholders (including health care providers) essential to a level of social transformation that alters how people think about their own health and health care and use community resources. Furthermore, success in this case will be driven significantly by the ability of local CTG awardees as well as National Network partners to communicate activities and results in a manner that lends itself to broad understanding, acceptance, and replication.
19Examples of innovative patient care models in the law include patient-centered medical homes, programs addressing the “unique needs” of women, care coordination for individuals with multiple chronic conditions, and establishment of community-based health care teams (PPACA §3021).
As visionary as the CTG program might be, it also suffers from an obvious limitation: the modest federal investment in pump-priming efforts that in turn can be reinforced and strengthened through a companion series of translational activities aimed at accelerating the pace of innovation. The Prevention and Public Health Fund has an Achilles’ heel in its financial structure. From a national policy perspective, the fund represents a breakthrough: a broad reframing of public health investment strategy so as to depart from the old pattern of specific and targeted categorical awards and move toward a more community-driven and integrated approach. But the fund rests on capped mandatory spending. Although out-year growth is possible, funding may fall well below the amount of pump-priming resources that will be essential to public health transformation, especially given the extraordinary constraints that now confront direct public spending on the social welfare reforms.
At current levels, the CTG funding can reach only 75 communities, far fewer than the number of pump-priming sites that ideally would be in operation. Some sites may fail or never reach their full potential. Moreover, in a nation of 300 million people living in thousands of communities, it may take hundreds of launches to yield sufficient examples of what works across the priority areas to in turn create a “back end” yield in terms of adoption sites. And of course, the entire goal of acceleration through incubators and networks may be inhibited by the reality that all federal capital investment funds have been committed, with communities eager to follow suit but potentially without the resources to get started.
Stated simply, in order to fully realize the potential of the CTG’s transformational aims, it is important to locate additional sources of funding to launch new interventions and expand the reach of existing activities.
Reforming Federal Standards for Tax-Exempt Charitable Hospitals
Section 501(c)(3) of the Internal Revenue Code (26 USC 501[c])establishes the legal standard for determining whether nonprofit hospitals will be treated as tax-exempt for federal income tax purposes. Historically this standard has turned on a facts-and-circumstances approach, which assesses the activities of individual hospitals to determine their tax-exempt worthiness (IRS, 2011).
Until the late 1960s, the Internal Revenue Service (IRS) required hos-
20This background discussion is based in part on an earlier analysis by the author and colleagues (Burke, 2012, a project funded by the Robert Wood Johnson Foundation and a joint project of the Foundation and the Hirsch Health Law and Policy Program at The George Washington University).
pitals seeking tax-exempt status to provide, to the extent of their financial ability, free or reduced-cost care to patients unable to afford it. Under Revenue Ruling 69-545,21 issued in 1969, the requirement for discounted care (charged at rates below cost) disappeared, replaced by a so-called “community benefit standard.” Under the community benefit standard, the IRS in theory evaluates hospitals based on whether they promote the health of a broad class of individuals in the community. IRS enforcement, however, has been “in theory” only; not only did the 1969 ruling make the standard more nebulous, but government enforcement has, until recently, been virtually nonexistent. Private legal challenges to this policy shift failed under a landmark U.S. Supreme Court decision holding that only Congress can alter overturn IRS policy, and that individual taxpayers have no standing to sue (Simon v EKWRO 426 U.S. 26 ). Certain states have been more aggressive in enforcing their own charitable conduct standards in relation to property tax exemption policies, but the federal government has remained essentially a passive onlooker.
In recent years, nonprofit hospitals came under increasing congressional22 and IRS (2011) scrutiny, following numerous reports of failure to discount or forgive bills in the case of indigent persons and the use of harsh collection practices. A 2008 U.S. Government Accountability Office (GAO) report valued the federal tax exemption alone at nearly $13 billion in 2002 (a figure that does not include the total value of the exemption to hospitals when state tax laws also are considered) while noting the nonenforceability of the 1969 standard. Prodded by Congress, the IRS conducted an assessment and noted in a 2009 report that there existed “considerable diversity” in hospitals’ community benefit activities. In 2008, the IRS required nonprofit hospitals to file supplemental information describing their community benefit-related spending (IRS, 2007). However, given the limited nature of the supplemental data collection, and the difficulties inherent in attempting to measure expenditures against what it means to provide community benefit (Gray and Palmer, 2010), enforcement continued to lag.
Federal legislative proposals to tighten the standard were introduced but went nowhere. In addition, over 45 class action lawsuits aimed directly at hospitals rather than the IRS and challenging their federal tax exempt status based on billing practices and harassment of the poor also were brought. Virtually all of these suits failed because of questions related either to standing (similar to the problems that arose with earlier litigation) or the vagaries of the standard itself. In sum, until enactment of the ACA, hospitals’ com-
21Rev. Rul. 69-545, 1969-2 C.B. 117. In the IRS’s words, Revenue Ruling 69-545 “remove[d] the requirements relating to caring for patients without charge or at rates below cost” (Rev. Rul. 69-5454, 1969-2 C.B. 117).
22Letter from Senator Chuck Grassley, Chairman of the Committee on Finance, to the Honorable Donald L. Korb, Chief Counsel, Internal Revenue Service. June 1, 2006.
munity benefit activities remained largely a matter of individual hospital discretion, state law requirements, and informal IRS guidance.
The Affordable Care Act (ACA)
The ACA amends the Internal Revenue Code (IRC) by adding a new section 501(r), innocuously titled “Additional requirements for certain hospitals” (PPACA §9007 adding IRC §501[r], 26 USC §501[r]). The new requirements apply to all facilities licensed as hospitals as well as organizations recognized by the treasury secretary as hospitals (IRC §501[r]). In the case of multihospital chains, each separate facility is independently held to the new requirements (IRC §501[r][C]). Hospitals failing to meet their obligations are subject to an excise tax of $50,000 for any taxable year in which they are not in compliance (IRC §4959, added by PPACA §9007); in addition, of course, they would experience the adverse publicity of being found out of compliance, in a manner not dissimilar to the adverse publicity that surrounds accusations of violations of the Medicare Emergency Medical Treatment and Labor Act.
The amendments impose new standards designed to assure financial assistance to indigent persons, curb excessive charges on medically indigent patients, bar aggressive collection tactics, and assure compliance with federal emergency care requirements (IRC §501[r]). Of greatest interest in the context of this analysis, however, is the obligation to undertake a community health needs assessment and adopt an implementation strategy that grows out of the needs assessment process.
The community health needs assessment (CHNA) process is a triennial one (IRC §501[r]) that must commence not later than the taxable year 2 years after enactment. The CHNA must be accompanied by an implementation strategy that grows out of the needs assessment. The process thus is dynamic, evolving, and action oriented. It occurs not once, but every 3 years; furthermore the CHNA must be accompanied by an implementation strategy and, as noted below, ongoing reporting regarding implementation efforts.
The ACA also establishes minimum requirements for the assessment itself. Under the law, an assessment must “take into account” “input” from persons who “represent” the “broad interests” of the “community served by the hospital facility.” It is important to emphasize that the term used is “community” and not the specific patients served by the hospitals. That is, the statute appears to require that hospitals assess the needs of the entire community covered by their service areas, including members of the community who may, for a variety of reasons, receive care elsewhere. Furthermore, where a hospital is a specialty hospital with a large geographic reach (e.g., a children’s hospital or a hospital with a regional shock trauma unit),
the needs assessment presumably will need to cover a community that is coextensive with this larger service area.
The CHNA must include “those” with “special knowledge or expertise in public health” (IRC § 501[r][B]) thereby underscoring the obligation of facilities to involve knowledgeable individuals, not merely to use public health data. In other words, the law emphasizes an assessment process that, with respect to both content and process, is inclusive of public health practice and expertise. Even the term community health needs assessment is one drawn from the public health literature (Robinson and Elkan, 1996; Wright et al., 1998), further drawing the connection between hospital obligations and public health practice. While the legislative history refers to hospitals’ ability to use public health information (Joint Committee on Taxation, 2010), the text itself underscores the inclusive nature of the obligation.
In addition, hospital assessments must be made “widely available” to the “public.” The term public could denote the general public or public within the hospital’s service area. The term available is not defined, but given its overall goal of community health needs assessment, the text suggests not only geographic availability but potentially availability in a cultural and linguistic sense, as well as accessibility in a manner that complies with federal laws aimed at assuring equal access (e.g., Title VI of the 1964 Civil Rights Act, §504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act).
Furthermore, covered hospitals must adopt an “implementation strategy.” The term adopted is not defined, nor is the term implementation strategy. The term adopted suggests in the context of hospital organizations, a formal activity, while the term implementation strategy may or may not mean the actual implementation of the plan or more simply, a strategy for implementing the plan.
The secretary of the treasury (or delegate) is tasked with reviewing the community benefit standard “at least once every 3 years” to ensure compliance (PL 111-146 §9007). Furthermore, the law requires that hospitals covered by the new reporting requirements must for each taxable year provide their audited financial statements as well as a description of how needs identified in the assessment are being addressed and which needs are not being addressed and why (PL 111-146 §9007).
Formal IRS guidance describing the CHNA has not yet been issued, but the needs assessment and implementation strategy elements already have attracted the attention of senior HHS officials. CDC, with the active involvement of IRS, has undertaken a significant initiative to convene public health agencies, community partners, and hospitals to advance joint planning and implementation strategy efforts.
CDC’s interest in section 501(r) makes enormous sense given the relatively modest size of the CTG program and the magnitude of hospitals’
community benefit obligations. The potential dollar value of the law is of considerable magnitude given the link between federal and state tax exemption policy. Furthermore, without the active involvement of public health at federal, state, and community levels, hospitals may be inclined to reinvest their obligation in their own direct patient care services. Furthermore, hospitals may be inclined to plan and implement alone and in isolation rather than through an integrated community effort.
This natural inclination to both act alone and to reinvest community benefits back into the hospital’s direct care activities reflects the history of hospital claims about how community benefits are invested (i.e., in discounted care and contractual allowances). Furthermore, this fractured approach to community benefit activities on the part of individual hospitals and hospital chains may follow from the greater robustness and clarity that section 501(r) has brought to hospitals’ uncompensated and discounted care and to their obligation to provide emergency care.
It is possible, with active public health agency involvement, for a different model to emerge around the considerable community benefit investment that hospitals will be expected to make. This new model might be thought of as a public health innovation in its own right, one that is as transformative to the health of a population as a more traditional intervention, as well as one that is totally consistent with both section 501(r) and the broad policy aims of the CTG program. As in the creation of the CMMI, the CTG and the Prevention and Public Health Fund reflect a fundamental congressional desire to improve the health of the population through community-wide interventions and act to reduce the burden on the health care system. The purpose of the CTG program is to hasten the pace at which innovations in public health policy are planned, designed, launched, conducted, evaluated, and diffused. This cycle obviously takes money: money to convene stakeholders, assess community need, and reach consensus; money to plan and design the intervention; pilot funding to launch innovations such as worksite wellness programs, accessible clinical preventive services in targeted communities and neighborhoods, safer and attractive destination points for active living, new approaches to healthier nutrition such as community and school food gardens, and services that promote emotional and mental health; and money to support evaluation, diffusion, and public health policy translation.
The challenge for public health agencies is to rapidly put these tools to work, both the funds that are clearly and directly earmarked for public health activities through the CTG program, as well as the resources that are held in trust by hospitals on their communities’ behalf. One way to approach the task might be to build hospitals into CTG partnerships in the initial capacity-building phase of any project and then to carry these partnerships into implementation, when resources can be combined and augmented to fund robust pilots and evaluations that are capable of taking root over the
long run (hospitals’ community benefit obligations are perpetual and unlike the Fund, section 501(r) obligations do not expire in 2015). Another strategy for public health agencies not pursuing CTG funding directly is to use the CTG model itself to develop community coalitions involving agencies, hospitals, and the full range of stakeholders to convene, plan, implement, evaluate, replicate, and diffuse. In this context, CTG can be thought of as a template rather than a funding source.
The ACA offers a broad array of intervention points for public health, in both a clinical prevention and community health sense. How health agencies pursue these opportunities will help determine not only the achievement of the ACA’s considerable public health aims but also the transformation of public health agency policy making and practice.
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