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

• CMS is cutting technical component payments for certain non-hospital imaging procedures by changing the imaging equipment usage assumption for equipment priced over $1 million from the current 50% usage rate to a 90% usage rate, which will reduce per procedure practice expense (PE) relative value units (RVUs) -- and thus the per procedure technical component reimbursement -- for services using such imaging equipment).   In the final rule, CMS decided only to apply this change to MRIs and CTs. The payment cut will be transitioned with full implementation not for four years. Beginning 2010, 75% of the practice expense is paid based on the old usage rate with full implementation in 2013. CMS also has adopted provisions to begin implementing the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) provision mandating an accreditation process for entities furnishing the technical component of certain advanced diagnostic testing procedures by January 1, 2012. CMS also is publishing a separate notice inviting independent accreditation organizations to participate in the accreditation program. 
• The final rule revises the Electronic Prescribing Incentive Program and the Physician Quality Reporting Initiative (PQRI) to, among other things, simplify e-prescribing reporting requirements, provide additional reporting options (including an electronic health record-based reporting mechanism), allow group practices to be considered successful e-prescribers; and expand PQRI quality measures. 
• CMS is adopting its proposal to refine malpractice RVUs to redirect payment to physicians with the highest malpractice costs.
• CMS is ending payment for consultation codes and instead requiring use of evaluation and management (E/M) codes. Note that under the final rule, CMS is making an exception to this policy for telehealth consultations and maintaining payment for G-codes used to bill for these consultations. Savings from the discontinuation of consultation codes are being redistributed to increase payments for the existing E/M services and to the payment for the surgical global period.
• The final rule clarifies the "stand in the shoes" standard for considering compensation arrangements under Stark.
• CMS is establishing a process for submitting claims for damages caused by the MIPPA provision terminating contracts awarded in 2008 under the durable medical equipment, prosthetic, orthotic and supplies (DMEPOS) competitive bidding program, and making changes in the “grandfathering” rules for noncontract suppliers. CMS is also finalizing policy changes regarding maintenance and servicing of oxygen equipment. 
• The rule provides that the annual per beneficiary outpatient therapy caps for CY 2010 will be $1860 each for (1) outpatient physical therapy and speech-language pathology services combined, and (2) outpatient occupational therapy services. CMS also notes that its authority to provide for exceptions to therapy caps will expire on December 31, 2009, unless the Congress acts to extend it.
• The final rule implements a variety of other Part B policies, including provisions that: establish Medicare coverage of cardiac and pulmonary rehabilitation services and chronic kidney disease education; update end-stage renal disease (ESRD) facility rates; require authorized compendia used to determining medically-accepted indications of drugs and biologicals used off-label in anti-cancer chemotherapeutic regimens to have a transparent process to evaluate therapies and identify potential conflicts of interests; revise certain requirements under the Part B drug competitive acquisition program. 

The official version of the rule is scheduled to be published in the Federal Register on November 25, 2009. CMS will accept comments on certain provisions of the final rule until December 29, 2009. Specifically, CMS is accepting comments on the following issues: interim RVUs for selected codes, the physician self-referral designated health services, services for consideration for the Five-Year Review of work RVUs, and whether additional guidance is needed regarding CMS’s policy regarding services provided under arrangement.  

• Change the equipment usage assumption for imaging equipment priced over $1 million from the current 50% usage rate to a 90% (which would significantly reduce per procedure practice expense relative value units (RVUs) -- and thus the per procedure technical component reimbursement -- for services using such imaging equipment) and begin to implement the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) provision mandating an accreditation process for entities furnishing certain non-hospital advanced diagnostic testing procedures by January 1, 2012;
• Expand the measures and measure groups that eligible physicians can report under the Physician Quality Reporting Initiative (PQRI), allow physicians to report data on PQRI measures through a qualified electronic health record product, and establish a new process for group practices to be considered successful electronic prescribers.
• Refine malpractice RVUs to redirect payment to physicians with the highest malpractice costs;
• End payments for consultation codes and instead require use of evaluation and management codes;
• Amend the "stand in the shoes" standard for considering compensation arrangements under Stark;
• Establish a process for submitting claims for damages caused by the MIPPA provision terminating contracts awarded in 2008 under the durable medical equipment, prosthetic, orthotic and supplies (DMEPOS) competitive bidding program, and make changes in the “grandfathering” rules for noncontract suppliers;
• Implement MIPPA provisions that provide Medicare coverage of cardiac and pulmonary rehabilitation services and chronic kidney disease (CKD) education;
• Revise Medicare end stage renal disease facility (ESRD) rates, including updating the drug add-on adjustment (using a refined methodology for projecting growth in drug expenditures), the wage index adjustment, and the ESRD wage index floor;.
• Make changes to the Part B drug competitive acquisition program designed to better define certain aspects of the program and minimize the administrative burden for participating physicians and vendors; and
• Require authorized compendia used in determining medically-accepted indications of drugs and biologicals used off-label in an anti-cancer chemotherapeutic regimen to have a transparent process for evaluating therapies and for identifying potential conflicts of interests.

The official version of the rule will be published in the Federal Register on July 13, 2009, and comments will be accepted until August 31, 2009. 

Hospitals

• The Congress should increase payment rates for the acute inpatient and outpatient prospective payment systems in 2010 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program.
• The Congress should reduce the indirect medical education adjustment (IME) in 2010 by 1 percentage point to 4.5 percent per 10 percent increment in the resident-to-bed ratio. The funds obtained by reducing the IME adjustment should be used to fund a quality incentive payment program.

Physicians and Ambulatory Surgical Centers

• The Congress should update payments for physician services in 2010 by 1.1 percent.
• The Congress should establish a budget-neutral payment adjustment for primary care services billed under the physician fee schedule and furnished by primary-care-focused practitioners. Primary-care-focused practitioners are those whose specialty designation is defined as primary care and/or those whose pattern of claims meets a minimum threshold of furnishing primary care services. The Secretary would use rulemaking to establish criteria for determining a primary-care-focused practitioner.
• The Congress should direct the Secretary to increase the equipment use standard for expensive imaging machines from 25 to 45 hours per week. This change should redistribute RVUs from expensive imaging to other physician services.
• The Congress should increase payments for ambulatory surgical centers (ASC) services in calendar year 2010 by 0.6 percent. In addition, the Congress should require ASCs to submit to the Secretary cost data and quality data that will allow for an effective evaluation of the adequacy of ASC payment rates.

Dialysis Services

• The Congress should maintain current law and update the composite rate in calendar year 2010 by 1 percent.

Skilled Nursing Facility Services

• The Congress should eliminate the update to payment rates for skilled nursing facility services for fiscal year 2010.
• The Congress should require the Secretary to revise the skilled nursing facility (SNF) prospective payment system by: adding a separate nontherapy ancillary (NTA) component, replacing the therapy component with one that establishes payments based on predicted patient care needs, and adopting an outlier policy.
• The Secretary should direct SNFs to report more accurate diagnostic and service-use information by requiring that: claims include detailed diagnosis information and dates of service, services furnished since admission to the SNF be recorded separately in the patient assessment, and SNFs report their nursing costs in the Medicare cost report.
• The Congress should establish a quality incentive payment policy for SNFs in Medicare and to improve quality measurement for SNFs, the Secretary should: add the risk-adjusted rates of potentially avoidable rehospitalizations and community discharge to its publicly reported post-acute care quality measures; revise the pain, pressure ulcer, and delirium measures currently reported on CMS’s Nursing Home Compare website; and require SNFs to conduct patient assessments at admission and discharge.

Home Health Services

• The Congress should eliminate the market basket increase for 2010 and advance the planned reductions for coding adjustments in 2011 to 2010, so that payments in 2010 are reduced by 5.5 percent from 2009 levels.
• The Congress should direct the Secretary to re-base rates for home health care services in 2011 to reflect the average cost of providing care.
• The Congress should direct the Secretary to assess payment measures that protect the quality of care and ensure incentives for the efficient delivery of home health care. The study should include alternative payment strategies such as blended payments and risk corridors and outcome-based quality incentives.

Inpatient Rehabilitation Facilities

• The update to the payment rates for inpatient rehabilitation services should be eliminated for fiscal year 2010.

Long-Term Care Hospitals

• The Secretary should update payment rates for long-term care hospitals for fiscal year 2010 by the projected rate of increase in the rehabilitation, psychiatric and long-term care hospital (RPL) market basket index less the Commission’s adjustment for productivity growth.

Recommendations on Medicare Advantage Payments

• The Congress should: Eliminate the stabilization fund for regional PPOs. Remove the effect of payments for indirect medical education from the MA plan benchmarks. Set the benchmarks that CMS uses to evaluate MA plan bids at 100 percent of FFS costs. Pay-for-performance should apply in MA to reward plans that provide higher quality care. Clarify that regional plans should submit bids that are standardized for the region’s MA-eligible population.
• The Secretary should calculate clinical measures for the FFS program that would permit CMS to compare the FFS program with MA plans.

Recommendations on Public Reporting of Physician Financial Relationships

• The Congress should require all manufacturers and distributors of drugs, biologicals, medical devices, and medical supplies (and their subsidiaries) to report to the Secretary their financial relationships with: physicians, physician groups, and other prescribers; pharmacies and pharmacists; health plans, pharmacy benefit managers, and their employees; hospitals and medical schools; organizations that sponsor continuing medical education; patient organizations; and professional organizations.
• The Congress should direct the Secretary to post the information submitted by manufacturers on a public website in a format that is searchable by: manufacturer; recipient’s name, location, and specialty (if applicable); type of payment; name of the related drug or device (if applicable); and year.
• The Congress should require manufacturers and distributors of drugs to report to the Secretary the following information about drug samples: each recipient’s name and business address; the name, dosage, and number of units of each sample; and the date of distribution. The Secretary should make this information available through data use agreements.
• The Congress should require all hospitals and other entities that bill Medicare for services to annually report the ownership share of each physician who directly or indirectly owns an interest in the entity (excluding publicly traded corporations). The Secretary should post this information on a searchable public website.
• The Congress should require the Secretary to submit a report, based on the Disclosure of Financial Relationships Report, of the types and prevalence of financial arrangements between hospitals and physicians.

Recommendations on Reforming the Hospice Benefit

• The Congress should direct the Secretary to change the Medicare payment system for hospice to: have relatively higher payments per day at the beginning of the episode and relatively lower payments per day as the length of the episode increases; include a relatively higher payment for the costs associated with patient death at the end of the episode; and implement the payment system changes in 2013, with a brief transitional period. These payment system changes should be implemented in a budget neutral manner in the first year.
• The Congress should direct the Secretary to: require that a hospice physician or advanced practice nurse visit the patient to determine continued eligibility prior to the 180th-day recertification and each subsequent recertification and attest that such visits took place, require that certifications and recertifications include a brief narrative describing the clinical basis for the patient’s prognosis, and require that all stays in excess of 180 days be medically reviewed for hospices for which stays exceeding 180 days make up 40 percent or more of their total cases.
• The Secretary should direct the Office of Inspector General to investigate: the prevalence of financial relationships between hospices and long-term care facilities such as nursing facilities and assisted living facilities that may represent a conflict of interest and influence admissions to hospice, differences in patterns of nursing home referrals to hospice, the appropriateness of enrollment practices for hospices with unusual utilization patterns (e.g., high frequency of very long stays, very short stays, or enrollment of patients discharged from other hospices), and the appropriateness of hospice marketing materials and other admissions practices and potential correlations between length of stay and deficiencies in marketing or admissions practices.
• The Secretary should collect additional data on hospice care and improve the quality of all data collected to facilitate the management of the hospice benefit. Additional data could be collected from claims as a condition of payment and from hospice cost reports.

• CMS has adopted changes to the antimarkup rule for diagnostic tests billed by an ordering physician. In the proposed rule, CMS had offered two alternative approaches to reforming the anti-markup rules. Under the first approach, the anti-markup provision would apply if the professional component (PC) or technical component (TC) of a diagnostic test is ordered by a billing physician and is either: (i) purchased from an outside supplier, or (ii) performed or supervised by a physician who does not share a practice with the billing physician or physician organization. A supervising or interpreting physician could "share" a practice as an employee or contractor of the single physician or physician group billing the test; otherwise the anti-markup restriction would apply. Under the second alternative approach, CMS would maintain the current regulatory text that applies the anti-markup provisions to the technical and professional components of diagnostic tests performed outside the “office of the billing physician or other supplier,” but CMS would more broadly define the “office of the billing physician or other supplier” to include space in which diagnostic testing is performed provided that it is located in the same building in which the billing physician or other supplier regularly furnishes patient care. In the final rule, CMS provides that a billing physician or other supplier can avoid application of the anti-markup provisions by meeting either alternative 1 or, on a case-by-case basis, the “site-of-service” approach of alternative 2, both of which were subject to certain modification in the final rule. Specifically, under alternative 1, a performing physician "shares a practice" with the billing physician group if he or she provides at least 75% of his or her professional services through the billing physician group-- even if the physician works for one or more billing physician groups or other health care entities. There are no restrictions on the location where the services can be performed under alternative 1. If the performing physician does not meet the 75% test, the billing physician may avoid the anti-markup rule if the performing physician is an owner, employee or independent contractor and the services are performed in the billing physician’s office. The “office” means any medical office space (regardless of the number of locations) in which the ordering physician regularly furnishes patient care and includes space where the billing physician furnishes diagnostic testing if the space is located in the same building where the ordering physician regularly furnishes patient care. 
• CMS did not adopt its proposal to require any physician or nonphysician practitioners organization furnishing diagnostic testing services (except diagnostic mammography services) to enroll as an independent diagnostic testing facility (IDTF) and meet most IDTF performance standards. Instead, CMS cites a MIPPA provision requiring accreditation of entities furnishing certain advanced diagnostic testing procedures by January 1, 2012. CMS states that it may reconsider finalizing the IDTF standard in a future rulemaking. CMS did, however, adopt its proposal to require entities providing mobile diagnostic testing services to enroll in Medicare, comply with IDTF performance standards and bill Medicare directly for their services (although CMS is not requiring mobile testing entities to bill directly for the services they furnish when such services are furnished “under arrangement” with hospitals). 
• CMS did not finalize in the rule its proposed exception to the physician self-referral rule that would have protected remuneration provided by a hospital to physicians on its medical staff under incentive payment or shared savings programs under certain conditions. Instead, in order to finalize the exception(s) CMS is reopening the comment period and soliciting detailed information on 55 specific questions related to such issues as the definition of key terms, safeguards against patient or program abuses, and various aspects of program design. 
• The final rule expands the quality measures that eligible professionals may report to qualify for incentive payments under the Physician Quality Reporting Initiative in 2009thatequal to 2% of their total Medicare allowed charges.  It also provides new PQRI reporting periods and provides for certain PQRI data to be submitted via clinical registries. In addition, as authorized by MIPPA, physicians and other eligible professionals who use a qualified electronic prescribing (e-prescribing) system to transmit prescriptions to pharmacies and submit required information on the claim may earn an incentive payment of 2% of their total Medicare allowed charges during 2009 (in addition to any PQRI incentive payment). 
• In the final rule, CMS is refining relative value units (RVUs), continuing the transition to a new “bottom up” methodology for practice expense RVUs, and applying the budget neutrality adjustment factor to the overall conversion factor (rather than applying the adjustment only to the physician work RVUs).
• CMS is codifying changes to the Part B drug average sales price payment methodology resulting from the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) that went into effect April 1, 2008, including the use of a volume-weighted methodology and revised payment rules for certain inhalation drugs. CMS had proposed several changes to the competitive acquisition program (CAP), which offers physicians the option to acquire certain injectable and infused Part B drugs from an approved CAP vendor rather than buying and billing the drugs directly. On September 10, 2008, CMS announced it was postponing the 2009 CAP indefinitely. In light of this postponement, CMS is not adopting changes in the CAP at this time, but the agency continues to solicit public feedback on a range of CAP issues.
• The final rule updates the End Stage Renal Disease (ESRD) facility wage index, implements a MIPPA provision providing a 1% increase to the ESRD composite rate and establishing a site-neutral base composite rate for hospital-based and independent dialysis facilities, and provides no update to the drug add-on payment.
• CMS has adopted a series of enrollment and documentation-related changes. Currently, newly enrolled physicians and non-physician practitioners may retroactively bill Medicare for up to 27 months prior to the effective date of their enrollment. The new enrollment rules will significantly limit retroactive billing by physicians and non-physician practitioners to no more than 30 days prior to the effective date of enrollment. In addition, the rule requires physicians and nonphysician practitioners to report to their carrier any changes of ownership, adverse legal actions, or change in practice location within 30 days (versus the current 90 days) or face revocation of Medicare billing privileges and the recoupment of Medicare payments from the date of the reportable change. Physicians and non-physician practitioners are barred from billing for services furnished after certain adverse actions. The final rule also requires providers and suppliers to maintain ordering and referring documentation (including the referring physician’s National Provider Identifier) for 7 years (rather than the proposed 10 years) years from the date of service, and it requires physicians and nonphysician practitioners to maintain written ordering and referring documentation for 7 years (rather than 10 years) from the date of service. CMS also clarifies the effective date of Medicare billing privileges.
• The final rule implements a MIPPA provision related to Medicare coverage of oxygen equipment. Specifically, MIPPA repeals a requirement that a supplier of oxygen equipment transfer title of the equipment to the beneficiary at the end of a 36-month rental period. Medicare payment for oxygen equipment will continue to be capped at 36 months (although payment will continue to be made for the oxygen contents). MIPPA requires the supplier that furnishes oxygen equipment during the 36-month rental period continue to furnish the equipment after the rental period ends for any period of medical need for the remainder of the “reasonable useful lifetime” of the equipment, even if the beneficiary moves out of the supplier’s normal service area. In addition, if a break in medical need occurs following the 36-month rental period, the supplier must resume furnishing the oxygen equipment when the beneficiary once again has a medical need for the oxygen equipment.  While MIPPA authorizes CMS to make maintenance and servicing payments for non-routine maintenance and servicing of supplier-owned oxygen equipment, CMS has determined that it is not reasonable and necessary to make such payments. However, for CY 2009 only, CMS will make payments when the supplier performs a routine maintenance and servicing visit (but not replacement parts) for oxygen concentrators and transfilling equipment following each period of continuous use of 6 months after the 36-month rental period ends. CMS welcomes comments on this issue, especially regarding whether these payments should continue past CY 2009.
• The final rule includes numerous other policy and payment changes, including provisions to address: potentially misvalued services; an expansion of the procedures subject to the multiple imaging procedure payment reduction; updates to the telehealth policy; potential refinements to geographic practice cost indices; revisions to the conditions of participation and other requirements affecting comprehensive outpatient rehabilitation facilities; changes to rehabilitation agency requirements, including provisions related to extension locations and emergency care; a prohibition on payment to suppliers of a continuous positive air pressure device when the supplier or its affiliate is directly or indirectly the provider of the sleep test that is used to diagnose a Medicare beneficiary with obstructive sleep apnea (although in the final rule CMS provides an exception for attended facility-based polysomnography); a new payment methodology for therapeutic shoes; and codification of other MIPPA self-implementing provisions, including an extension of the therapy cap exceptions process and changes to payments for clinical laboratory and ambulance services, among others. 

CMS has released the advanced text of the rule, and the official version is scheduled to be published in the Federal Register on November 19, 2008.  CMS is accepting comments on a limited number of provisions until December 29, 2008, including the exception for incentive payment and shared savings programs; certain MIPPA provisions, interim RVUs and pricing information for selected codes; and physician self-referral designated health services codes.

The following are highlights of the legislation:

• Physician Fee Schedule: MIPPA maintains physician payment rates for 2008 (rather than implement the 10.6% cut that was triggered on July 1, 2008), and provides a 1.1% increase for 2009 (rather than the forecasted 5.4% cut). The law also extends for two years the Physician Quality Reporting Initiative (PQRI), increases incentive payments for reporting by 2%, and makes other reforms to the program. The act promotes electronic prescribing (e-prescribing) by providing incentive payments for practitioners who use a qualified e-prescribing systems in 2009 through 2013, and reducing payments by 2% for providers practitioners who fail to e-prescribe beginning in 2011 (with limited exceptions). MIPPA also requires non-hospital advanced imaging providers to be accredited by 2012 and establishes a voluntary demonstration program to test the use of appropriateness criteria for advanced diagnostic imaging services.
• DMEPOS Competitive Bidding.  MIPPA delays and reforms the Centers for Medicare & Medicaid Services' (CMS) competitive bidding program for certain categories of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The first round of the program went into effect in 10 geographic areas on July 1, 2008. H.R. 6331 terminates contracts awarded under round one and rebids those areas in 2009, with bidding for round two delayed until 2011. The delay is financed by cutting fee schedule payments for all items covered by round one bidding program by 9.5% nationwide beginning January 1, 2009, followed by a 2% increase in 2014 (with certain exceptions). MIPPA also includes a series of procedural improvements to the bidding process, and addresses quality by, among other things, requiring subcontractor accreditation, excluding complex rehabilitation wheelchairs and negative pressure wound therapy from bidding, and exempting of certain rural and low-population areas from bidding. Separately, MIPPA repeals current oxygen equipment transfer of ownership requirements.
• Therapy Caps Exception Process.  MIPPA extends through December 31, 2009 the exceptions process relative to the annual per-beneficiary limitations on outpatient therapy services.
• Clinical Laboratory Services. The act repeals the competitive bidding demonstration project for clinical laboratory services and instead reduces the fee schedule update for clinical lab services by 0.5% in each of the next 5 years.
• Medicare Advantage (MA) Provisions. MIPPA makes a series of payment and policy changes affecting Medicare Advantage plans, including a $1.8 billion cut in the MA stabilization fund for regional preferred provider organizations in 2012 and a phase-out of the adjustment for indirect medical education. 
• Medicare Part D Drug Plans. MIPPA establishes timeframes for plan payments to pharmacies and long-term care pharmacy submission of claims; codifies current coverage of certain “protected classes” of drugs; clarifies the use of Part D drug data for research and other purposes; limits certain sales and marketing activities; and makes other Part D reforms. 
• End-Stage Renal Disease Provisions. The law provides a 1.0% update to the composite rate for renal dialysis services for 2009 and 2010, requires the Secretary to establish a fully bundled ESRD payment system by January 1, 2011, and establishes a quality incentive payment program for ESRD providers, effective January 1, 2011.
• Medicaid Drug Reimbursement. MIPPA delays the adoption of Medicaid payment based on average manufacturer price (AMP) for multiple source drugs and prevent publication of AMP data until October 1, 2009.

Additional details regarding the legislation are available on the House Ways and Means Committee web site.

The following are highlights of the bill:

• Physician Payments: In the absence of Congressional action, Medicare physician fee schedule payments will be subject to a more than 10 percent across-the-board cut effective July 1, 2008. The Baucus bill would delay the cut through December 31, 2009 and provide a 1.1% update for 2009. In addition, the bill would extend the physician quality reporting initiative (PQRI) through December 31, 2010, with an increase in the PQRI bonus to 2.0% for 2009 and 2010. The bill also would provide financial incentives for physicians to use e-prescribing, establish accreditation requirements for providers of the technical component of certain diagnostic imaging services, extend the current treatment of certain physician pathology services, and extend an increase in the geographic adjustment to payment for physician work in rural areas.
• Renal Dialysis Provisions:  The bill would increase the composite rate for end stage renal disease (ESRD) services by 1 percentage point for both 2009 and 2010, and require the Secretary to established a fully bundled payment system for ESRD services. In addition, dialysis providers would be subject to new quality standards.
• Other Part B Provisions:  Among other things, the bill would extend the outpatient therapy cap exceptions process; extend current payment rules covering brachytherapy and radiopharmaceuticals; extend the Medicare hold harmless provision under the hospital outpatient prospective payment system for certain small rural hospitals; repeal the clinical laboratory competitive bidding demonstration project (offset by a 0.5 percent reduction in lab payment updates for each of the next 5 years); improve payments for clinical lab tests performed by critical access hospitals; and modify payments for oxygen and power wheelchairs.
• Hospital Provisions: The legislation would extend the Medicare Rural Hospital Flexibility Program, rebase sole community hospital payments, and make other rural hospital improvements.
• Medicare Advantage Reforms: The proposal includes a series of changes to Medicare Advantage payment and other policies, including a phase-out of indirect medical education payments and a $1.8 billion cut in the Medicare Advantage Stabilization Fund.
• Medicare Part D Drug Plan Provisions: Among other things, the bill would set deadlines for drug plan payment to pharmacies; establish claims submission time-frames for long-term care pharmacies; require weekly updates on pricing standards used for pharmacy reimbursement; allow coverage of barbiturates and benzodiazepines; codify coverage of certain “protected classes” of drugs; clarify the use of compendia for the drug benefit; and clarify the use of Part B data for research and other purposes.
• Clinical Trials, Clinical Effectiveness: The bill would authorize alternative methods of payment for Medicare services provided to beneficiaries who participate in certain randomized control trials conducted by a Department of Health and Human Services (HHS) agency. It also would authorize Institute of Medicine studies on best practices in setting clinical decision-making protocols and on methodological standards for conducting systematic reviews of clinical effectiveness research.
• Medicaid Drug Payments:  The bill would delay the establishment of Medicaid payment limits using Average Manufacturer Price for multiple source drugs through September 30, 2009.
• Beneficiary Improvements: The bill would expand coverage of preventive services, reduce copayments for outpatient mental health services, expand access to certain low-income programs, and limit certain Medicare Advantage and Part D drug plan sales and marketing practices, among other things.

Additional details regarding the Baucus bill are available here. The full Senate is expected to consider the legislation later this month. If approved by the Senate, attention would then shift to reaching an agreement with the House, which passed a much different Medicare bill last summer (H.R. 3162). Prospects for enactment are uncertain, given the Administration’s strong opposition to reductions in Medicare Advantage funding. Note that Senator Chuck Grassley, Ranking Republican on the Finance Committee, also has outlined an alternative Medicare proposal that does not include managed care cuts, which could serve as the basis of a compromise agreement.