Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

On February 13, 2009, the House and Senate approved the conference report to accompany H.R. 1, the American Recovery and Reinvestment Act.  President Obama signed the bill into law on February 17, 2009.  The $790 billion economic stimulus package includes a number of health care policy provisions.  Among other things, the final agreement includes:

• $19 billion to accelerate the adoption of health information technology systems;
• Strengthened federal privacy and security provisions to protect personally-identifiable health information;
• Approximately $87 billion in additional federal matching funds over two years to help states maintain their Medicaid programs in the face of state budget shortfalls;
• $1.1 billion to support comparative effectiveness research;
• $1 billion for a new Prevention and Wellness Fund; and
• Provisions to help unemployed workers maintain health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) law.
• A provision blocking a fiscal year 2009 reduction in Medicare payments to teaching hospitals related to capital payments for indirect medical education;
• A provision blocking a fiscal year 2009 Medicare payment cut to hospice providers related to a wage index payment add-on;
• Technical corrections to the Medicare, Medicaid, and SCHIP Extension Act of 2007 related to Medicare payments for long-term care hospitals;
• A temporary increase in states’ annual disproportionate share hospital allotments;
• An extension of moratoria on Medicaid regulations for targeted case management, provider taxes, and school-based administration and transportation services through June 30, 2009, and a new moratorium on a Medicaid regulation related to hospital outpatient services through June 30, 2009;
• An extension of Transitional Medical Assistance and the Qualified Individual program; and
• Medicaid prompt payment requirements for nursing facilities and hospitals.

Information on the versions of the measure approved earlier by the House and Senate is available here.    

Update:  On February 17, 2009, President Obama signed into law H.R. 1, the American Recovery and Reinvestment Act (the “ARRA”).  Reed Smith's Health Care Memorandum summarizes the major health policy provisions of the Act.

 

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On December 18, 2008, the Congressional Budget Office (CBO) released a major report entitled “Budget Options, Volume 1: Health Care,” which sets forth 115 policy options for Congress to consider as it addresses health care system reform. The CBO points out that Medicare is expected to grow from 2.8 percent of gross domestic product (GDP) in 2008 to nearly 9 percent of GDP in 2050. This spending growth will be fueled primarily by growth in per capita medical costs, according to the CBO, with the aging of the population playing a secondary role. In light of these trends, the CBO offers specific options addressing such areas as: health insurance (market reforms, tax treatment, access to federal programs); health care quality and efficiency; geographic variation in Medicare spending; paying for Medicare services (including hospital, physician, imaging, and post-acute care, and Medicare Advantage plan services, among others); financing and paying for services in Medicaid (including drug payment revisions) and SCHIP; premiums and cost sharing in federal health programs; long-term care; health behavior and health promotion; and closing the gap between Medicare’s spending and receipts.  The CBO also issued a separate report focusing on insurance reform, “Key Issues in Analyzing Major Health Insurance Proposals.” The CBO warns that without changes in policy, a substantial and growing number of nonelderly people are likely to be without health insurance. This issue cannot be addressed without making major changes in the financing or provision of health insurance and health care, which will involve "difficult trade-offs between the objectives of expanding insurance coverage and controlling both federal and total costs for health care." The report describes the assumptions that CBO would use in estimating the effects of key elements of proposals to modify the health insurance system on federal costs, insurance coverage, and other outcomes. In particular, it considers the types of issues that would arise in estimating the effects of proposals to: provide tax credits or other types of subsidies to make insurance less expensive to the purchaser; require individuals to purchase health insurance; require firms to offer health insurance to their workers or pay into a fund that subsidizes insurance purchases; replace employment-based coverage with new purchasing arrangements or provide strong incentives for people to shift toward individually purchased coverage; and provide individuals with coverage under, or access to, existing insurance plans such as the Medicare program, either as an additional option or under a “Medicare-for-all” single-payer arrangement.

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The Agency for Healthcare Research and Quality, through its Effective Health Care program, will sponsor an invitational symposium on clinical and comparative effectiveness research methods in June 2009 (dates to be confirmed). The symposium is a follow up to the 2006 AHRQ conference on Emerging Methods in Comparative Effectiveness and Safety; papers presented at that conference appeared in a 2007 Medical Care supplement. The 2009 conference will focus on empirical studies and methodological advances appropriate for publication as a supplement in a peer-reviewed journal. AHRQ is inviting participation in this second symposium through submission of a brief abstract on relevant research by February 13, 2009. Preference will be given to research that can be presented at the symposium as a prelude to publication in the journal supplement and that will be complete or nearly so by early summer 2009.

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On November 12, 2008, Senate Finance Committee Chairman Max Baucus released a white paper entitled "Call to Action: Health Reform 2009." The document details Senator Baucus’ goals for health care reform in the broad areas of coverage, quality, and cost. Highlights of the lengthy plan include the following.  

• Ensuring Health Coverage for All Americans. The Baucus plan seeks universal health insurance coverage by supplementing the current employer-based system with a nationwide insurance pool called the Health Insurance Exchange. Premium subsidies would be available to qualifying families and small businesses. While the Exchange is being created, individuals aged 55 to 64 could buy in to Medicare, and access would be expanded to Medicaid and the State Children’s Health Insurance Program (CHIP). Once affordable health insurance options are available, all individuals would be required to have insurance coverage. 
• Improving Value by Reforming the Health Care Delivery System. Among other things, the plan calls for strengthening the role of primary care and chronic care management; refocusing payment incentives toward quality and value; and encouraging providers in different settings to collaborate in a way that improves quality and saves money (e.g., gainsharing). As part of the payment reforms, Baucus calls for overhaul of the Medicare physician fee schedule formula, greater surveillance of high-growth services, expanded use of pay-for-performance methodologies, and global payments for services provided to a patient during hospitalization and post-discharge. The Baucus plan also seeks to improve the health care infrastructure by supporting comparative effectiveness research through a new Health Care Comparative Effectiveness Research Institute and by promoting the adoption of health information technology. 
• Financing a More Efficient Health Care System. The Baucus plan seeks to prevent Medicare fraud, waste, and abuse through: more stringent enrollment criteria; enactment of payment methodologies that discourage waste (such as the DMEPOS competitive bidding program); encouraging provider and supplier compliance; vigilant government oversight of government health programs; and strong punishment for program abuses. The plan also seeks to increase transparency in the health system by mandating disclosure of gifts and other transfers of value made by drug and device companies to physicians and other health care professionals; increasing scrutiny of physician self-referrals (including a focus on physician-owned hospitals); and requiring public reporting and disclosure of health care price and quality information. With regard to private plans in Medicare, the Baucus plan also would address overpayments to Medicare Advantage (MA) plans, promote performance measures for Part D prescription drug plans and the application of pay-for-performance principles to these plans, and extend Medicaid price discounts to the drugs used by the dual-eligible population in the Part D program. In addition, the plan addresses long-term care reforms, including policies to continue to shift care from institutional settings to home and community settings, malpractice reform, and reforms of the tax code designed to make incentives more efficient, distribute benefits more fairly, and promote smarter consumer spending of health care dollars.

Health care reform promises to be a high-profile issue for the new Congress and the incoming Obama Administration. The broad scope of the Baucus white paper suggests that Congress intends to focus beyond access to insurance or the immediate problem of fixing the Medicare physician fee schedule and examine fundamental policy questions concerning how to promote quality and value throughout the health system at a time of limited federal resources.

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On June 13, 2008, the Medicare Payment Advisory Commission (MedPAC) released its June 2008 report to the Congress on "Reforming the Delivery System." MedPAC discusses a variety of payment and delivery reforms to improve Medicare quality, coordinate care, and reduce cost growth. 

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