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

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.

On June 19, 2008, the House of Representatives approved a modified version of emergency Iraq and Afghanistan appropriations legislation (H.R. 2642) that also includes funding for a number of domestic priorities. Among other things, the bill would extend a current moratorium on implementation of certain Medicaid regulations and block additional rules through April 1, 2009. The rules affected by the legislation involve: payments to public safety net institutions; coverage of rehabilitation services; school-based administrative and specialized medical transportation services for children; graduate medical education payments; case management services; and state provider tax laws. To finance the repeal, the bill would extend an electronic asset verification demonstration for Medicaid applicants and beneficiaries, and reduce balances in the Physician Assistance and Quality Improvement (PAQI) Fund. The bill also provides an additional $150 million for Food and Drug Administration food and medical product safety efforts, and $25 million annually for Medicaid anti-fraud activities.  The bill does not include restrictions on physician ownership of hospitals, as had been included in an earlier Senate version of the measure. The White House has announced its support for the House bill, although it is unclear at this time whether the Senate will adopt this version or propose additional revisions.