15.1 Healthcare Reform: ARRA, HITECH, the ACA & Accountable Care
Key Takeaways
The American Recovery and Reinvestment Act (ARRA), signed February 17, 2009, contained the HITECH Act as Title XIII, funding EHR incentive payments and strengthening HIPAA.
HITECH's Medicare EHR incentive program paid eligible professionals up to $44,000 over five years (up to $63,750 over six years under Medicaid) for meaningful use, with Medicare payment reductions for non-users starting in 2015.
The Affordable Care Act, signed March 23, 2010, extended dependent coverage to age 26, barred pre-existing condition exclusions, required no-cost preventive services, and created health insurance marketplaces.
The ACA created the Medicare Shared Savings Program for accountable care organizations (Section 3022) and the CMS Innovation Center (Section 3021), which tests alternative payment models.
The ACA's Medicaid expansion to 138% of the federal poverty level became optional for states after the Supreme Court's 2012 NFIB v. Sebelius decision.
Healthcare Reform: ARRA, HITECH, the ACA & Accountable Care
Quick Summary: Three laws reshaped the environment every practice manager works in. The American Recovery and Reinvestment Act (ARRA, 2009) carried the HITECH Act, which paid physicians to adopt electronic health records and tightened HIPAA. The Patient Protection and Affordable Care Act (ACA, 2010) expanded coverage, rewrote insurance rules, created accountable care organizations (ACOs) in Medicare, and added fraud-fighting tools. MACRA (2015) then replaced the old Medicare fee formula with the Quality Payment Program (Section 15.2).
ARRA and the HITECH Act (2009)
ARRA, signed February 17, 2009, was an economic stimulus law. Title XIII is the Health Information Technology for Economic and Clinical Health (HITECH) Act, which did three things practice managers still feel today:
1. EHR Incentive Programs and Meaningful Use
- Medicare paid eligible professionals up to $44,000 over five years, and Medicaid paid up to $63,750 over six years, for adopting certified EHR technology and demonstrating meaningful use.
- Meaningful use rolled out in stages: Stage 1 (capturing data electronically), Stage 2 (advanced clinical processes and information exchange), and Stage 3 (improved outcomes and interoperability).
- Starting in 2015, Medicare cut payments to eligible professionals who were not meaningful users (beginning at 1% and rising).
- In 2018 CMS renamed the programs Promoting Interoperability; for physicians, meaningful use now lives on as the Promoting Interoperability category of MIPS (Section 15.2).
2. Certified EHR Technology and ONC
HITECH codified the Office of the National Coordinator for Health IT (ONC) and its certification program, the foundation of the certified EHR requirements covered in Chapter 14.
3. Stronger HIPAA Privacy and Security
HITECH created the Breach Notification Rule, made business associates directly liable, added tiered civil penalties, required covered entities to honor a patient's request not to send information to a health plan when the patient pays in full out of pocket, and strengthened electronic access rights (Chapter 13). ARRA also temporarily subsidized COBRA premiums in 2009–2010.
The Affordable Care Act (2010)
The Patient Protection and Affordable Care Act was signed March 23, 2010, and amended by the Health Care and Education Reconciliation Act on March 30, 2010.
Insurance Market Reforms
| Provision | What It Did |
|---|---|
| Dependent coverage to age 26 | Plans that cover dependents must allow adult children to stay on a parent's plan until age 26 (effective 2010) |
| No pre-existing condition exclusions | Barred for children in 2010 and for everyone starting in 2014, along with guaranteed issue |
| Preventive services without cost-sharing | Non-grandfathered plans must cover recommended preventive services, such as many screenings and vaccines, with no copay or deductible |
| No lifetime or annual dollar limits | On essential health benefits |
| Essential health benefits and out-of-pocket maximums | Required categories of benefits for individual and small-group plans and annual caps on in-network cost-sharing |
| Medical loss ratio | Insurers must spend at least 80% (individual and small group) or 85% (large group) of premiums on care and quality improvement or pay rebates |
| Health insurance marketplaces | Exchanges with income-based premium tax credits |
| Employer shared responsibility | Applicable large employers (50 or more full-time employees) must offer affordable coverage or risk penalties (Chapter 11) |
| Individual mandate | Required most people to have coverage; the federal penalty was reduced to $0 starting in 2019 |
Medicaid Expansion
The ACA expanded Medicaid to nearly all adults with incomes up to 138% of the federal poverty level. In NFIB v. Sebelius (2012), the Supreme Court made the expansion optional for states; most states have since adopted it. For practices, expansion changed payer mix and increased the importance of Medicaid managed care contracting.
Delivery and Payment Reforms
- Medicare Shared Savings Program (Section 3022): Medicare ACOs share savings when they reduce spending while meeting quality standards.
- CMS Innovation Center (Section 3021): tests new payment models such as bundled payments, primary care models, and ACO models; successful models can be expanded nationally.
- Value-based payment modifier (Section 3007): adjusted physician fees by quality and cost; later replaced by MIPS.
- Hospital Readmissions Reduction Program: penalizes hospitals with excess readmissions, which is why hospitals push practices for rapid post-discharge follow-up.
- Open Payments / Physician Payments Sunshine Act (Section 6002): manufacturers report payments and transfers of value to physicians, now published on a public CMS website.
Program Integrity Provisions
The ACA strengthened the fraud and abuse laws covered in Chapter 8: the 60-day overpayment rule (Section 6402(a)), clarification that a kickback-tainted claim is a false claim and that no specific intent is needed under the Anti-Kickback Statute (Section 6402(f)), enhanced provider screening and authority to require compliance programs (Section 6401), and the nondiscrimination rule in Section 1557, which also drives language-access duties.
Accountable Care Organizations
An ACO is a group of physicians, hospitals, and other providers that voluntarily takes responsibility for the quality and total cost of care for an assigned population.
- How patients are assigned: Medicare assigns beneficiaries to an ACO based on where they received most of their primary care. Patients remain free to see any Medicare provider.
- How the ACO is paid: Providers continue to bill fee-for-service. At year-end CMS compares actual spending with the ACO's benchmark; if savings exceed the minimum savings rate and quality standards are met, the ACO shares the savings (and, in two-sided tracks, shares losses). See Chapter 7 for the track details.
- Other ACO models: The CMS Innovation Center has run higher-risk ACO models such as ACO REACH (2023–2026), and commercial and Medicare Advantage plans offer their own ACO-style contracts.
- What changes for a practice: care coordination staff, chronic care management, attention to emergency department and hospital use, quality measure reporting, and data sharing through the ACO.
Later Reform Milestones
| Year | Law or Rule | Key Effect on Practices |
|---|---|---|
| 2015 | MACRA | Repealed the sustainable growth rate formula and created MIPS and Advanced APMs |
| 2016 | 21st Century Cures Act | Information blocking rules and patient API access (Chapter 14) |
| 2022 | No Surprises Act (effective January 1, 2022) | Surprise billing protections and good faith estimates for uninsured and self-pay patients (Chapter 3) |
| 2022 | Inflation Reduction Act | Medicare drug price negotiation and the Part D out-of-pocket cap (Chapter 6) |
Exam Traps
Caution
HITECH Is Part of ARRA: HITECH was enacted as Title XIII of the 2009 stimulus law, not as part of the ACA.
Tip
The ACA Created the MSSP: Medicare ACOs come from ACA Section 3022; MACRA came five years later.
Which law contained the HITECH Act, which funded the Medicare and Medicaid EHR incentive programs and strengthened HIPAA enforcement?
The Affordable Care Act of 2010
The American Recovery and Reinvestment Act of 2009
The Medicare Access and CHIP Reauthorization Act of 2015
The Balanced Budget Act of 1997
A patient asks whether her 25-year-old son can remain on her employer's family health plan. Under the Affordable Care Act, what is the rule for plans that offer dependent coverage?
Adult children may remain only until age 21 unless they are full-time students
Adult children may remain only if they live in the parent's home and are unmarried
Adult children may remain on a parent's plan until age 26
Adult children may remain until age 30 in every state
Which statement about accountable care organizations in the Medicare Shared Savings Program is accurate?
ACOs were created by MACRA in 2015 and replace fee-for-service billing with full capitation
Beneficiaries assigned to an ACO must see only ACO providers or lose coverage
ACO savings are paid to each physician based on the number of patients referred to the ACO hospital
The ACA created the program in Section 3022; assigned beneficiaries keep free choice of providers, and the ACO shares savings if spending falls below its benchmark and quality standards are met
Sections you finish are checked off in the contents.