On September 13, Senator Bernie Sanders (I-VT)—with 16 Democratic cosponsors—released the Medicare-For-All Act of 2017, intended to transition the American health care system to a single-payer system. In addition to the bill text, Senator Sanders released an executive summary, title summary, and white paper on financing options.

The Act would establish the Universal Medicare Program (UMP) and, in doing so, make sweeping changes to the health care system. Once the UMP went into effect (for children, on January 1 of the first calendar year after the bill is enacted and three years later for adults), most benefits would no longer be available under the traditional Medicare program, the Medicaid program, or the Children’s Health Insurance Program (CHIP). The bill would also end the Federal Employees Health Benefits Program, the TRICARE program, and the Affordable Care Act (ACA) marketplaces; it would prohibit the sale of private health insurance, employer-sponsored insurance, and retiree coverage if that coverage duplicates payment for any item or service covered under the UMP. (Insurers and employers could still offer coverage of additional benefits that are not covered under the UMP.) The Department of Veterans Affairs and the Indian Health Service would remain intact.

Consumers currently enrolled in coverage through the private health insurance market, Medicaid, Medicare, CHIP, and Title X family planning services could maintain that coverage until the UMP went into effect. But the bill would also create a comprehensive transitional Medicare buy-in option for eligible individuals and a transitional public option. The transitional public option plan would be available through the ACA marketplaces and offer platinum-level coverage. Any U.S. resident would be eligible to enroll in the transitional public option plan and remain eligible for premium tax credits and cost-sharing reductions.

Although there is a fair level of detail about the transitional coverage options, the bill, despite its 96 pages, provides far fewer details about key UMP standards (such as eligibility and enrollment) and grants significant flexibility to the Secretary of Health and Human Services (HHS) to develop major program components. The Secretary is, for instance, directed to develop policies, procedures, guidelines, and requirements related to eligibility, enrollment, benefits, provider participation standards and qualifications, levels of funding, provider payment rates, medical necessity standards, planning for capital expenditures and health professional education, and regional planning mechanisms.

The first half of this post discusses the UMP; the second half is devoted to the transitional coverage options for eligible individuals.

What’s In The UMP

UMP Eligibility

The Act establishes a universal benefit entitlement for all U.S. residents, which would presumably include immigrants and potentially undocumented individuals. However, the residency eligibility requirements would be defined by the Secretary of HHS through regulations. The bill provides HHS with discretion to more broadly define eligibility requirements so long as rules inhibit travel and immigration to the U.S. for the sole purpose of obtaining health care services.

UMP Enrollment

The Act includes few details about the UMP enrollment mechanism and largely defers the development of this process to HHS. HHS must, however, provide for automatic enrollment of individuals at birth in the U.S., upon immigration to the U.S., or upon gaining resident status in the U.S. Upon enrollment, each individual would be issued a universal Medicare card, which would not include an individual’s Social Security number, to facilitate identification and claims processing.

UMP Covered Benefits and Services

The UMP benefit package is largely consistent with the 10 categories of essential health benefits (EHB) that are outlined in the ACA:

hospital services (including inpatient and outpatient hospital care, emergency services, and inpatient prescription drugs);

ambulatory patient services;

primary and preventive services (including chronic disease management);

prescription drugs, medical devices, and biologics;

mental health and substance abuse treatment services (including inpatient care);

laboratory and diagnostic services;

comprehensive reproductive, maternity, and newborn care;

pediatrics;

oral health, audiology, and vision services;

and short-term rehabilitative and habilitative services and devices.

The bill further clarifies that services will be covered if they have been provided pursuant to a national practice guideline that has been recognized by HHS. Unlike EHBs under the ACA, HHS is not directed to define these benefits, a decision that HHS under the ACA ultimately pushed to state decisionmakers.

HHS must regularly evaluate whether changes to the UMP benefit package are needed to reflect the most current medical practice and research, consult with stakeholders, and make recommendations to Congress to improve or adjust the benefit package. The bill allows each state to provide additional benefits so long as the state covers the expense of doing so. HHS is directed to make national coverage determinations with respect to experimental services and drugs, and the bill extends the Medicare appeals process to these coverage decisions.

Under the bill, providers can enter into contracts with consumers for health care services, but must follow certain requirements before doing so and can only do so for services where the provider will not receive payment or reimbursement under the Act. For instance, contracts between providers and consumers would have to have been made in writing prior to when the service was delivered and cannot be entered into during an emergency health situation. Both parties must agree not to submit a claim under the UMP (even if the items or services would otherwise be covered under the UMP), and the provider has to file an affidavit with HHS within 10 days of entering into the contract. The affidavit must attest that the provider will not file a claim or receive reimbursement for any item or service provided to any UMP beneficiary for a one-year period. If the provider nonetheless knowingly and willfully submits a claim or receives reimbursement from the UMP, no payment or reimbursement would be made for any item or service furnished by that provider.

As noted above, most benefits would no longer be available under the traditional Medicare program, the Medicaid program, or the CHIP program once the UMP went into effect. The only exceptions are for patients in the midst of inpatient hospital services or extended care services, for Medicaid long-term care services, and for any other service covered by a state Medicaid program as of September 1, 2017 that is not covered under the UMP. States that provide these additional services would have to comply with maintenance of effort requirements with respect to eligibility standards and expenditures.

UMP Ban on Cost-Sharing

The bill would prohibit all cost-sharing for consumers, stating that no deductibles, coinsurance, copays, or similar charges can be imposed for most benefits covered under the UMP. HHS could impose cost-sharing for 1) a new Medicaid long-term care program; and 2) drugs and biologics. The bill allows HHS to develop an evidence-based cost-sharing schedule but would cap annual cost-sharing for drugs and biologics at $200 per individual, adjusted for inflation. To incentivize the use of generics, HHS is allowed to exempt a brand-name drug from the $200 annual out-of-pocket limit if a generic version of the drug is available. The bill would also prohibit balance billing by barring providers from imposing an additional charge to beneficiaries for benefits provided under the UMP.

UMP Provider Participation

To participate in the UMP, a provider must be licensed or certified, meet federal and state requirements to provide health services, meet existing Medicare provider standards (unless waived by HHS), and meet any additional minimum provider standards developed by HHS. The bill includes a list of optional areas that HHS could address in developing new minimum provider standards, such as facility quality, personnel training and competence, continuity of service, and patient satisfaction.

As under the current Medicare program, providers must file a participation agreement with HHS and meet existing federal requirements related to accepting Medicare funds. Providers must be given a reasonable period to meet any new standards, and HHS is prohibited from banning a provider from participation for reasons other than their ability to provide covered services. In addition, providers that qualify to offer services through the Department of Veterans Affairs or the Indian Health Service automatically qualify as UMP providers.

The bill also includes a broad nondiscrimination provision that mimics the protections outlined in Section 1557 of the ACA, which prohibits individuals from being excluded from, denied benefits, or subject to discrimination by health providers, programs, and activities. The bill, however, explicitly defines sex discrimination, which has been the subject of ongoing litigation under Section 1557, to include sex stereotyping and discrimination based on gender identity, sexual orientation, and pregnancy and related medical conditions, including termination of pregnancy. The bill also requires the establishment of an administrative adjudication process to address discrimination claims and authorizes a private right of action.

UMP And State Flexibility

States are allowed to set additional standards with respect to eligibility, benefits, and provider standards so long as these standards do not restrict eligibility or reduce access to benefits or services. Like HHS, states cannot prohibit a provider from participating in the program based on reasons other than provider’s ability to provide services, and states can adopt additional standards for providers in their state.

UMP Payments To Providers

Under the bill, HHS would be required to establish a fee schedule that establishes payment amounts for UMP benefits. This fee schedule would be developed in a manner that is consistent with the existing processes for determining Medicare payments. Any current planned or implemented payment reform activities or demonstrations, including reform activities or demonstrations under the ACA or the Medicare Access and CHIP Reauthorization Act of 2015, would be extended under the bill.

The bill would require more frequent reviews of the relative value of physicians’ services, direct the Secretary of HHS to consult with the Medicare Payment Advisory Commission, and require the development of a public, standardized process for reviewing the relative values of physicians’ services. This new process would include, at a minimum, the development of methods and criteria to identify and prioritize services for review, review stakeholder recommendations, and identify additional resources to consider during the review process. The bill would also require HHS to present Congress with 1) a written plan for using funds to collect and use information on physicians’ services in the determination of relative values; and 2) a proposed plan to track HHS’ review of the relative values of physicians’ services, including a timeline for tracking data such as when, how, and by whom services are identified for review, when relative values are adjusted, and when new services are reviewed or added.

UMP Payments For Prescription Drugs, Devices, And Equipment

HHS would annually negotiate the prices to be paid for covered pharmaceuticals, medical supplies, and medically necessary assistive equipment. HHS would be required to establish a prescription drug formulary system that would promote the use of generic medications to the greatest extent possible. Consumers and clinicians could petition for the coverage of a new pharmaceutical or to remove an ineffective or dangerous medication. HHS is also directed to promulgate rules regarding the use of off-formulary medications that would allow for patient access but would not compromise the formulary.

UMP Financing And National Health Budget

Funding for the UMP would be provided through a newly established Universal Medicare Trust Fund, which would receive appropriations that would have otherwise been used to fund Medicare, Medicaid, the Federal Employees Health Benefit Program, the TRICARE program, the maternal and child health program, vocational rehabilitation programs, programs for drug abuse and mental health services, programs providing general hospital or medical assistance, and any other federal programs identified by HHS and the Treasury that provide for the payment of health services. Although the bill itself does not include additional pay-fors, Sen. Sanders simultaneously released a white paper on options to finance the Act, which includes income-based payroll taxes, savings from health tax expenditures, higher personal income taxes for those with incomes over $250,000, and a new tax on the wealthiest 0.1 percent of households, among other funding mechanisms.

The bill also directs HHS to establish an annual national health budget beginning with the year prior to the date on which UMP benefits first become available. The national health budget would specify the total expenditures for covered services, quality assessment activities, health professional education expenditures, administrative costs, innovation activities through the Center for Medicare & Medicaid Innovation, operating and other expenditures, capital expenditures, and prevention and public health activities. Recognizing that the UMP will be disruptive to the health insurance workforce, the bill allows up to one percent of the national health budget to be allocated to programs that provide assistance to workers in the field of health insurance administration who may experience displacement because of the Act. This budget allowance is authorized for the first five years that the UMP is in place.

HHS must also establish and maintain a reserve fund to respond to the costs of treating an epidemic, pandemic, natural disaster, or other health emergency. Workers compensation carriers would have to reimburse the UMP for the cost of services if the UMP provides consumers with coverage for work-related injuries and illnesses.

UMP Uniform Reporting Standards

The bill would require the Secretary of HHS to establish uniform reporting requirements and standards to develop a national database with information on providers, the cost of facilities, the quality of services, health care outcomes, and health equity. HHS must regularly analyze this information and define rules and procedures to allow researchers, scholars, providers, and others to access and analyze the data for quality and outcomes research. This data would be used to develop statistical studies, create and test delivery system reforms, and inform evidence-based policymaking. The information would be regularly audited and included in an annual report to Congress on the status of Act implementation, including information on enrollment, benefits, expenditures and financing, cost-containment measures, quality assurance, and opportunities for improvements.

UMP Regional Offices And Beneficiary Ombudsman

HHS is directed to establish and maintain regional offices to promote access to tertiary care facilities, equipment, and services. Regional offices must include a director appointed by the Secretary, one deputy director for each state in the region, and one deputy director to represent the Native American and Alaska Native tribes in the region. Regional offices would be responsible for providing an annual state health care needs assessment report, recommending changes in provider reimbursement or delivery system reform, and establishing a quality assurance program. The bill notes that the existing Centers for Medicaid & Medicaid Services (CMS) regional offices should be incorporated wherever possible.

HHS is also directed to appoint a beneficiary ombudsman to receive complaints, grievances, and requests for information with respect to any part of the UMP and assist consumers in seeking appeals or redeterminations. The ombudsman would be required to submit annual reports to Congress and HHS on the office’s activities along with recommendations for improving the Act.

UMP Office of Primary Health Care

The bill would establish an Office of Primary Health Care within the Agency for Healthcare Research and Quality. The Office would be tasked with functions that include coordinating health professional education policies, developing a system to track physician specialties and practices, and promoting policies that expand the number of primary care practitioners, registered nurses, midlevel practitioners, and dentists. The Office would also be required to develop national goals to increase access to high-quality primary health care, particularly in underserved areas and for underserved populations, no later than one year after the bill’s enactment.

UMP Quality Standards

Under the bill, the Center for Clinical Standards and Quality within CMS would take the lead in developing new quality standards and addressing health disparities. The Center would evaluate existing practice guidelines, quality standards, performance measures, and medical review criteria and adopt methodologies for profiling health care practice patterns and identifying outliers. The Center would also develop minimum criteria for external quality review entities, for example, by adopting conflict of interest standards to prohibit financial incentives that would favor one pattern of practice over another. The Center would annually report its findings on outcomes research and practice guideline development to inform the Secretary’s decisionmaking.

The Center would also be required to evaluate approaches for ongoing, accurate, and timely collection of data on health disparities and health system performance on the basis of race, ethnicity, gender, geography, and socioeconomic status. The Center must identify these approaches in a report to Congress and HHS within 18 months after UM benefits become available. HHS would then be required to implement those approaches no later than 2 years after UMP benefits become available. The Center would submit similar reports to Congress and HHS with recommendations for improving the identification of health disparities on an ongoing basis thereafter.

Long-Term Care

The bill requires state Medicaid programs to cover long-term care services, which are defined as 13 categories of services that include nursing facility services for individuals 21 years old and older, home health services, rehabilitative services, and inpatient psychiatric hospital services for individuals 21 years old and older. This requirement would go into effect for quarters beginning on or after the effective date of the UMP.

Transitional Coverage Options

Transitional Medicare Buy-In Option

Because the UMP would not go into effect for adults for up to four years after enactment, the bill includes a transitional Medicare buy-in option for certain eligible individuals. The buy-in option would be available to U.S. citizens, nationals, and lawful aliens who meet age requirements and are not eligible for Medicare Part A benefits or eligible to enroll under Medicare Parts A or B. These age requirements begin at age 55 in the first year and phase down to age 35 by the third year. Thus a 55-year old who is not otherwise eligible for Medicare could enroll in the buy-in option beginning on January 1 of the first year after enactment; a 45-year old could do so during the second year after enactment; and a 35-year old could do so during the third year after enactment.

Individuals enrolled in the buy-in option would be entitled to the same benefits and protections as an individual enrolled under Medicare Parts A, B, and D and would have the ability to enroll in a Medicare Advantage plan with qualified prescription drug coverage. HHS would define other program requirements, such as enrollment periods, and establish a monthly premium based on the average annual per capita amount for benefits and administrative expenses payable under Medicare Parts A, B, and D in the year for all buy-in enrollees. Buy-in enrollees could select a Medicare Advantage plan or a prescription drug plan which requires individuals to pay higher premiums and would be entitled to enrollment in Medigap policies on a guaranteed issue basis. However, buy-in enrollees would not be eligible for Medicare cost-sharing assistance.

The bill would define coverage through the buy-in option as minimum essential coverage so enrollees would comply with the individual mandate. The bill also requires that the buy-in option be treated as a silver qualified health plan offered through the marketplace, meaning that buy-in enrollees who would otherwise be eligible for premium tax credits and cost-sharing reductions under the ACA could apply these subsidies towards the cost of the buy-in option. HHS would be required to determine the applicable second-lowest cost silver plan for purposes of calculating premium tax credits. Cost-sharing reduction payments—which would typically go to an issuer—would be directed to HHS.

Transitional Public Option

As an additional transitional coverage option, the bill requires CMS to establish and offer a public option—a Medicare Transition plan—through the ACA marketplaces beginning with the first plan year after enactment of the bill and ending once UMP goes into effect. The Medicare Transition plan would comply with the ACA’s consumer protections, such as the ban on preexisting condition exclusions, coverage of essential health benefits, and the coverage of preventive services without cost-sharing, as well as requirements that apply to qualified health plans. However, the plan would be available to any U.S. resident and would provide consumers with generous cost-sharing protections by requiring an actuarial value of 90 percent, equivalent to a platinum plan.

Premiums for the Medicare Transition plan would vary based on family size, age, and tobacco use. This is largely consistent with the ACA’s rating rules except that rates for this plan would not vary based on geography, as is currently allowed under the ACA. Medicare Transition plan enrollees would be eligible for premium tax credits and cost-sharing reductions.

However, the bill alters eligibility requirements for these subsidies in several ways, particularly for consumers in states that have not expanded their Medicaid program. First, premium tax credits for the Medicare Transition plan would be available to all eligible individuals, including those with incomes over 400 percent of the federal poverty line (FPL) in all states. Second, in states that have not expanded their Medicaid program, premium tax credits for the Medicare Transition plan would be available to those with incomes under 100 percent FPL.

Third, the bill would adjust premium affordability thresholds for Medicare Transition plan enrollees from those found in the ACA, establishing a 2 percent threshold for those with incomes up to 100 percent FPL and a 4.08 percent threshold for those with incomes of 150 percent FPL and higher. Medicare Transition plan enrollees would also be eligible for cost-sharing reductions, which would be extended to those with incomes under 100 percent FPL in states that have not expanded their Medicaid program.

All current participating Medicare providers would be considered Medicare Transition plan participating providers, and CMS would establish a process to allow for additional participating providers. The Medicare Transition plan would reimburse providers at Medicare fee-for-service program rates for services provided under Medicare Parts A and B; for services not provided under Parts A and B, CMS would set its own reimbursement rates consistent with the way that the Medicare fee-for-service program sets its rates. CMS would negotiate all payment rates for prescription drugs or, if unable to reach a negotiated agreement, CMS would pay the lesser of the price paid by the Department of Veterans Affairs, the Department of Defense and other federal agencies, or by state Medicaid agencies subject to drug rebates.

In implementing the buy-in option, HHS must ensure that there is no effect on benefits for current Medicare beneficiaries and no negative impact on the Medicare Trust Fund. HHS must also consult with interested parties, such as groups representing beneficiaries, providers, employers, and insurers, in promulgating regulations to implement this section.

Transitional Medicare Reforms

Finally, the bill also includes additional consumer protections that would apply to the traditional Medicare program until the UMP goes into effect. These include

an annual out-of-pocket cost-sharing maximum of $1,500 for individuals entitled to or enrolled in Medicare Parts A and B; elimination of Parts A and B deductibles; a Part D annual out-of-pocket threshold of $305, with potential exceptions for brand-name drugs; elimination of cost-sharing for covered prescription drugs; coverage of dental services, vision services, and hearing aids and examinations; and elimination of the two-year Medicare waiting period for individuals with disabilities.

These changes would generally go into effect the year beginning January 1 of the year after enactment.