House passes temporary 3-month fix to Medicare MD Pay Cut -- Senate action needed

The House passed a defense bill tonight that includes 60 day halt to Medicare Physician 21.2% payment cuts scheduled to take effect Jan.1. The House included an amendment to the 2010 Defense Department appropriations bill, HR. 3326 that freezes Medicare payments at their current levels until Feb. 28, 2010.

The legislation now goes to the Senate, where Republicans are expected to filibuster it, forcing Senate Majority Leader Harry Reid (D-NV) to obtain 60 votes before the bill can be considered. This procedural hurdle will likely delay consideration of the bill until Friday or Saturday. This is a critical issue that has been inappropriately caught in the health care reform debate along with other critical issues impacting reimbursement such as excluding distribution prompt pay terms from Average Selling Price (ASP) calculations. We need health care providers to urge their Senators to act on these issues now with at least a temporary fix.

Good news for providers: Senate Expected to drop "Medicare-Buy In" Option

Reports starting Monday night are that top Senate Democrats are prepared to sacrifice proposals to expand Medicare in a bid to win over moderates and amass the 60 votes needed to pass their health legislation. While this will be portrayed in the media as "dropping the public option", this is actually very good news for health care providers that recognize the problematic issues that expanding Medicare to any 55 to 64 year olds would create at this time. Instead this leaves the Federal Employee Health Benefit Plan (and some expansion of Medicaid) as they resources to address the uninsured. We expect to see a CBO score on the revised plan today.

One urgent issue that remains unclear is whether Congress will fix the looming Medicaid physician reimbursement cut of over 20% that will go into effect in January 1st. In these economic times lets hope that Congress addresses this prospectively even if its just another temporary or one-year fix.

More votes on health reform amendments expected later this afternoon.

Specter-Brown file key amendment today to correct reimbursement issue impacting physician-administered drugs

This afternoon, Senators Specter (D-PA) and Brown (D-OH) filed an amendment to the Senate health reform bill that would exclude from the calculation of average sales price (ASP) prompt pay discounts extended to wholesalers up to 2% of wholesale acquisition cost (WAC) for a period of five years. This language is similar to language that was approved in the House Energy and Commerce Committee, but was not included in the final House bill.

This technical modification is essential to accurate and consistent reporting of ASP. This change would correct Medicare reimbursement to physicians and hospital outpatient centers to be consistent across products. This issue is critical to products that must be professionally administered including treatments for cancer, rheumatoid arthritis, and multiple sclerosis.

Physicians, hospitals and patient advocacy organizations should urge their Senators to ask Senator Reid to include the prompt pay amendment in the Senate health reform legislation.

With the potential growth of Medicare this issue takes on added urgency. The proposed language would also be consistent with similar language within Medicaid.

Next week looks to be busy for Senate on Health Reform

The second week of the Senate's official debate on its health care reform bill (S 3590) was marked by partisan floor speeches and resulted in adoption of only 7 of the nearly 300 filed amendments by press time. While the process has been slow, Senate Majority Leader Harry Reid (D-NV) reported earlier this week that a tentative agreement on a replacement for the public option has been reached.

Based on the limited details released to date, the agreement appears to establish private, nonprofit health insurance programs that would be set up by the Office of Personnel Management, much like the federal employees program. These programs would be run by private companies, but a new government insurance plan could be triggered if the private plans are not acceptable. The pending agreement would also allow uninsured people between the ages of 55 and 64 who lack insurance to buy into the Medicare program and expand the Children's Health Insurance Program. The agreement would also require health insurance companies to spend at least 90 percent of the premiums they collect on medical services. The compromise proposal is now at the Congressional Budget Office (CBO) for analysis and a score is expected by early next week.

Drawing ire from Republican senators, Senator Reid halted, temporarily, the contentious health care reform debate to focus on the year-end omnibus spending bill, HR 3288, adopted in the House yesterday. Reid shifted the upper chamber's priority to the spending bill while he awaits the CBO score on the alternative to the public plan option. Reid's decision to put the health care reform debate in a holding pattern pending CBO analysis, has delayed a controversial drug importation amendment to the health care legislation, along with a motion to limit its tax impact on individuals and married couples.

During a conference call last night with health care groups, Senate Majority Leader Harry Reid and Finance Chairman Max Baucus (D-MT) discussed the following time table as related to Senate health care reform bill:

• The Senate will return to health care on Monday, December 14 with the goal of completing consideration of all amendments by Tuesday, December 15 and begining consideration of procedural motions on Wednesday, December 16.
• The vote on final passage is targeted for Monday, December 21.

Despite the ongoing wrangling in the Senate over health care reform, the Senate is working to pass its reform bill as early as next week with the hope that the House will approve the Senate version before Congress adjourns for the year thereby limiting the need for a conference committee. Still other speculation suggests that the final bill may not pass the full Congress until Valentine's Day.

Senate Leaders Work on Compromise on Public Option as Debate Continues

The Senate Healthcare debate continues today and there is momentum toward compromise on some of the most polarizing issues. A potential compromise plan is being developed as an alternative to the public option that would allow the government to contract with private insurers, similar to the Federal Employees Health Benefits Program (FEHBP). This model was proposed by Obama during the election and is also similar to the approach used with success for Medicare Part D which had bipartisan support.

However, there are also reports that the compromise plan may also allow people over age 55 to buy-in to Medicare. This would probably generate significant concerns from health care providers including hospitals and physicians since Medicare reimbursement rates are often considered inadequate.

Today a team of Senate democratic freshmen proposed a range of cost containment proposals related to health care reform. Their proposal did not appear to have any controversial components but would expand or accelerate a wide range of cost containment strategies that have been discussed as part of health reform.

The Senate debate today will break at 12:30 pm EST and is expected to reconvene at 2:30 pm EST. We may see a vote on the abortion related amendment this afternoon. Also McCain has proposed an amendment that would grandfather all existing Medicare Advantage enrollees.

To date, the Senate has voted on 12 amendments of the 212 that have been offered to H.R. 3590.

Today the Senate Finally Began Votes on Amendments to Health Reform

Today, following three days of debates without a vote on a single amendment, the Senate has begun to vote on amendments to the health reform bill.

The first two votes were on two amendments related to women's health. The first, offered by Senator Barbara Mikulski (D-MD) would give the Health and Human Services secretary authority to authorize the services, with the aim of ensuring that women over 40 receive mammograms and other treatments. This amendment passed with a vote of 61-39, with Republican Senators Olympia Snowe, Susan Collins, and David Vitter voting for the amendment and Democratic Senators Ben Nelson and Russ Fiengold voting against it. An alternative amendment submitted by Republican Lisa Murkowski was defeated 41-59, with Sen. Ben Nelson voting with the Republicans.

McCain's motion to remove the Medicare cuts from the bill failed 42-58 but two democrats, Nelson and Webb, voted for it. Senior groups, including AARP, opposed the McCain amendment and argued that the cuts in Medicare were cuts to reduce waste and not cuts in benefits. Senator Michael Bennet's amendment requiring that nothing in the Patient Protection and Affordability Act will result in a reduction of guaranteed Medicare benefits passed 100-0.

With momentum finally building in the Senate debate it still remains unclear where we will end up on the public option and there were reports today that another proposal is expected to be revealed next week that would provide more of a compromise that the "opt-out" language currently in the Senate health reform bill. Thus far there is no variation of a public option that has attracted the support of 60 Senators.

Prediction of the day: Despite progress today, it remains difficult to imagine how the Senate will be able to pass health reform legislation before the the holidays. Possible but challenging especially given wild card issues such as abortion and the public option.

Senate Vote Expected Saturday would move the Senate Health Reform Bill forward for debate

The technical procedures and process in the Senate is different than the House and makes the process for trying to pass this Bill before the end of the year more challenging. As part of the unveiling of the bill, Senate Majority Leader Harry Reid (D-NV) outlined the process by which the Senate bill is expected to move through required procedural steps to get to the vote.

• Senator Reid has already filed cloture on the motion to proceed on his health care bill. It is expected that the cloture vote on the motion to proceed to the bill will occur on Saturday night. In order to invoke cloture on the motion to proceed, 60 votes are required. This is a vote to simply move to consideration of the bill, not the bill itself.
• If cloture is invoked on the motion to proceed, there will likely be three weeks of debate on the bill, with numerous procedural votes, before a final vote on the bill is held.
• The timeline for debate combined with the holidays makes is difficult (but possible) for the Senate to pass reform before the end of the year. The process is very fluid and President Obama may end up playing a key role especially if he pushes for compromise in order to pass a bill before this session of Congress ends.
• Both the House and Senate are targeting to adjourn on December 18th but that also appears optimistic.
  

House Passes SGR Fix to prevent huge cut for physicians; Will Senate follow or do a temporary fix?

On November 19, the House voted to approve H.R. 3961 , The Medicare Physician Payment Reform Act of 2009, by a vote of 243 to 183. Only 1 Republican member voted in favor of the bill. The legislation did not contain any off-sets of the bill's estimated $210 billion cost. The bill would restructure the SGR formula on a long-term basis beginning in 2011, and would provide two separate updates, one for evaluation, management and preventive services and another for other services.

Immediately prior to the vote on H.R. 3961 the House rejected by a vote of 177 to 252 a Republican Motion to Recommit that included and alternative SGR fix, which would have would have provided physicians with a 2% Medicare payment rate increase in each of the next 4 years.

The bill will now be sent to the Senate, where it is unlikely to be taken up due to the opposition to the fact that the cost of the legislation is not off-set. H.R. 3961 is a priority for the White House as a critical piece of the overall healthcare reforms, and it is still expected that the Congress will approve legislation to at least delay the 21.2% cut to the Medicare Physician fee schedule prior to the end of the year regardless of whether they pass a health care reform bill.

The SGR issue an unfortunate distraction and is often mis-represented and mis-understood by the media. We must all urge Congress to do the right thing and fix this technical error that each year threatens physician reimbursement for Medicare patients.

Senate Releases Democratic Health Bill: $849 Billion

Tonight, Majority Leader Reid (D-NV) unveiled the $849 billion Senate Democratic health reform bill. This bill is a combination of the bills that the Senate Finance Committee and Senate Health, Education, Labor and Pensions (HELP) Committee passed this year.

The bill is over 2,000 pages so we have not digested it at this point and the full bill is available at http://democrats.senate.gov/reform/patient-protection-affordable-care-act.pdf. The bill costs $849 Billion over 10 years and would provide coverage for 94% of Americans. The Bill is estimated to reduces deficit $127 billion in first 10 years with more dramatic savings estimated beyond the first 10 years.

We understand that key Senate votes including Landrieu, Nelson and Lincoln met in Reid's office this afternoon for a first look at the bill. We have also heard that Baucus had to return home to Montana for a family emergency.

Since there has to be one day between the day cloture if filed and the day you have to vote we assume that cloture vote will be Saturday based on reports this evening. It could be delayed if Baucus can not return to DC. If Reid is able to get to the 60 vote mark, he will invoke cloture on the motion to proceed. Thirty hours after cloture is invoked the Senate will proceed to vote on adoption of the motion to proceed itself. All of this happens before the real work on the health reform bill.

Based on a summary released tonight by the Senate, the Bill does include some immediate benefits primarily in areas of insurance market reforms and issues that impact patient access to adequate health insurance coverage:

• Access to Affordable Coverage for the Uninsured with Pre-existing Conditions
• Re-insurance for Retiree Health Benefit Plans
• Closing the Coverage Gap in the Medicare (Part D) Drug Benefit
  * The Patient Protection and Affordable Care Act will reduce the size of the “donut hole” by raising the ceiling on the initial coverage period by $500 in 2010.
  * The Patient Protection and Affordable Care Act will also guarantee 50 percent price discounts on brand-name drugs and biologics purchased by low and middle-income beneficiaries in the coverage gap.
• Small Business Tax Credits
• Extension of Dependent Coverage for Young Adults (until age 26)
• Free Prevention Benefits
• No Arbitrary Limits on Coverage
  * The Patient Protection and Affordable Care Act will prohibit insurers from imposing lifetime limits on benefits and will restrict the use of annual limits.
• Ensuring Value for Premium Payments (insurance standards and new transparency)
• Public Access to Comparable Information on Insurance Options
• Health Insurance Consumer Information
• Clear Summaries, Without the Fine Print
• Appeals Process
  * Under The Patient Protection and Affordable Care Act, all health plans will implement an effective appeals process for appeals of coverage determinations and claims.
• Administrative Simplification Under the Patient Protection and Affordable Care Act, all health plans will adopt uniform descriptions of plan benefits and appeals procedures and will use uniform forms and claims processing processes to reduce costs.

Still waiting for the Senate Bill -- but Senate & House leaders hope to end this session of Congress Dec 18th

Washington insiders reported today that Senate and House leaders are hoping to end this session of Congress by Dec. 18, even though neither chamber has figured out the end game for health care reform and must-pass appropriations bills.

Congress and staff are expecting to work through the weekends in December to try to meet this goal which is challenging given the current complexities of health reform legislation.

The Senate is expected to begin debate on its own version of health reform legislation but the expected CBO score has not yet been released today. Senator Reid has been expecting the CBO score to be finalized someone today. We understand that Senator Reid had several different health care scenarios sent to be scored by CBO and we hope to have draft legislation to review this week.

Senate CBO Score on Health Reform Expected on Tuesday

Based on reports from the Senate Finance Committee Meeting today, the much anticipated score for Senate health reform legislation is now expected on Tuesday. The score is expected to be acceptable and in the 900 billion range.

The 72 hour notice would start on Tuesday and we assume the bill would be released to the public shortly thereafter. The vote to invoke cloture could then be as early as Friday. We expect members will review the bill first and then public release later this week.

With House Health Reform Passed, Will Senate be able to finish this year?

Last Saturday, November 7, the House passed its healthcare reform bill HR 3962, the Affordable Health Care for America Act, by a narrow margin of 220-215. Now as we look to next week -- will the Senate be able to build consensus to be able to pass their own bill before the end of the year? The House now holds an upper hand but many still believe that the Senate will in the end develop legislation most likely to build final consensus.

Some key highlights of the House Bill are provided below:

Public Option

• HHS would establish a public health insurance option as one of the available insurance plans in a national Health Insurance Exchange
• HHS would negotiate payment rates for health care items and services, including prescription drugs. Payment rates could not be lower, in the aggregate, than rates under Medicare

Medicare Part D

• The coverage gap (or Part D donut hole) would be phased out by 2019
• While the coverage gap exists, drug manufacturers would be required, as a condition of drug coverage under Part D, to pay a rebate equal to 50% of the negotiated price of the drug. The amount of the rebate would count toward the enrollee's TrOOP.
• Manufacturers would be required to enter into a separate agreement providing for payment to Medicare of rebates on Part D drugs dispensed to full-benefit dual eligibles
  HHS would have explicit authority to negotiate with drug manufacturers the prices, including discounts and rebates, that PDPs may be charged for drugs.

Medicaid Reimbursement and Rebates

• The FUL formula enacted in the DRA (but not yet implemented) would be replaced with a new formula. The new formula --130% of the weighted average of monthly AMPs of the drugs - would replace the DRA-enacted formula of 250% of the lowest AMP among the multiple source drugs
• The minimum rebate for innovator drugs would be increased from the current 15.1% to 23.1% of AMP. The current rebate for non-innovator drugs would remain unchanged at 11% of AMP.
• Medicaid rebates would be imposed on covered outpatient drugs dispensed to enrollees of HMOs, including Medicaid MCOs, unless the drug is subject to discounts under the 340B discount program

340B Drug Discount Program

• The program would be expanded to several additional covered entities, including, among others: free-standing cancer hospitals and children's hospitals that are excluded from Medicare's PPS and that meet disproportionate share requirements; critical access hospitals; community mental health clinics; Medicare-dependant small rural hospitals; sole community hospitals; and rural referral centers. The new covered entities would not be eligible for 340B pricing if they obtain covered outpatient drugs through a GPO. The final bill does not extend the 340B discounts to drugs purchased for inpatient use, a provision that was included in an earlier version of the bill

Biosimilars Pathway

• The bill creates a new pathway for the approval of applications for biological products shown to be biosimilar or interchangeable with a licensed reference product, including provisions to resolve patent disputes. The bill provides for up to 12.5 years of exclusivity (initial 12-year exclusivity period that may be extended by 6 months of pediatric exclusivity).

Excise Tax on Non-Retail Sales of Medical Devices

• A new excise tax equal to 2.5 % of the wholesale price would be imposed on medical device manufacturers for medical devices sold for use in the U.S.

Comparative Effectiveness Research

• A new Center for Comparative Effectiveness Research (CER) would be established within HHS to conduct, support and synthesize CER on health care items, services, and systems, including pharmaceuticals and medical devices.
• The Center would have access to data from any federal agency to conduct its research. An independent CER Commission would be established to recommend priorities, review research conducted by the Center and recommend methods of disseminating results.
• The Center would not be permitted to mandate coverage, reimbursement or other policies for any public or private payer, and its research findings could not be considered mandates for payment, coverage or treatment.
  

Senate leaders say health reform legislation possible next week

Today, Senate Majority Leader Harry Reid (D-NV) said he expects to bring legislation to overhaul the U.S. health-care system up for debate on the Senate side next week. Despite pressure and criticism, Senator Reid said today that he believes the Senate can pass the measure by the end of the year.

In order to get the 60 votes he needs Reid will have to bridge differences on whether reforms should include a public option, employer mandate and significant differences in how to fund coverage for the uninsured. In addition, federal funding for abortion has also entered in as a new, potentially disruptive issue for health reform.

Democrats control 60 votes in the Senate, just enough to pass legislation if they stick together. Currently, Senator Reid is waiting for Congressional Budget Office (CBO) cost estimates before unveiling his health-care bill and pushing to begin debate perhaps as early as next week.

What's next for Health Reform and Senate Following landmark House vote Saturday Night?

Most insiders have projected that the more moderate Senate would ultimately lead the way for final legislation on health care reform. However now with the Senate's landmark vote this weekend with a health reform bill that includes a public option the next steps on the Senate side are not clear. Pressure is mounting for the Senate to complete a vote before the Christmas deadline but the Senate side have not embraced the public health insurance option that Senate Majority leader Harry Reid has seemed to suddenly be supporting despite the fact that he does not have 60 votes needed for health reform including a true public option.

The Senate debate over health care now seems to have come to a dead stop, raising the possibility the Senate won’t even begin floor debate until after Thanksgiving. Timing is not the only issue as Reid must find a way to bridge the divide in the Democratic party between liberals pushing for a public option and moderates who have resisted the most ambitious version of that plan.

According to an article published in Politico, in a private meeting last week with Finance Committee Chairman Senator Max Baucus (D-MT) and moderate Democrats aired a long list of concerns about the House bill compared to the Senate Finance Committee approach including: the $1.2 trillion price tag on the House bill, its reliance on a “millionaires tax” to fund the overhaul and the lack of common ground between the House and Senate on other taxes, among other issues.

The House vote now puts more pressure on the Senate to bend which could make a more moderate, bipartisan approach to health reform a greater challenge.

Potential House Vote on Health Reform Saturday; But are the votes there?

House Speaker Nancy Pelosi (D-CA) announced today that she will have enough votes to pass Democratic health care legislation by Saturday and their are rumors of a potential Saturday vote. However many DC insiders are seeing the statement as confirming that she does not yet have the 218 votes needed to pass the $1 trillion dollar bill. Moderates including Democratic Blue Dogs still have concerns with fundamental components of the bill. Over the next 24 hours moderates and Blue Dogs will likely determine if Democrats have the votes they need but at this point there are significant gaps.

Today, AARP and AMA announced support for the House health reform legislation. However dramatic concerns remain regarding components of the bill beyond the public option such as the Medicare Part D drug price negotiation. Many key aspects of the House health reform plan were cut in the final version and there is concern that health reform needs to address long overdue issues such as Medicare Part B reimbursement and physician reimbursement cuts which have significant patient access implications.

Democrats file House Reform Bill; Friday vote possible but not likely

House Health Reform Update:

Late Tuesday night, the House Rules Committee posted the Manager's amendment of the proposed healthcare reform legislation. Based on House Democrats' agreement with Republican leaders to post final healthcare bills online for a minimum of 72 hours before a vote is called, the earliest a vote could be taken would be Friday night, but a vote could easily be delayed beyond that.

A delay seems likely as the amendment came on an Election Day which saw Democrats lose some key governors' races in the country, potentially creating new pressure for more moderate or bipartisan approach to health reform.

Republicans have also proposed a substitute amendment that focuses mainly on health insurance reforms but does include language to allow a pathway for biosimilars.

CMS Finalizes Controversial 2010 Medicare Physician Fee Schedule

The Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2010 Medicare's Physician Fee Schedule (MPFS) final rule last week. The final rule with comment period includes a negative 21.2 percent reduction in 2010 Medicare physician payments, which is slightly less than the 21.5 percent cut in the proposed rule released July 1. The cuts, resulting from the Sustainable Growth Rate (SGR) payment update formula, will take place unless Congress passes legislation to reverse them. At this point we expect Congress will implement a temporary fix again this year although there has been hope of a permanent fix.

The SGR issue is only part of the concern with this final rule as the there are other significant policy changes in the rule which seems particularly harsh on oncology and cardiology as well as services with high levels of work from non-physicians. Some drug administration codes (including chemotherapy) will see reimbursement cut over 20% even after the SGR issue is fixed. The increases in reimbursement appear limited to office visit codes.

Key points:

• Finalizes the policy to remove physician-administered drugs from the definition of physician services for purposes of computing the physician update formula
• Moves forward with updating practice expenses using a new survey, the Physician Practice Information Survey (PPIS), over a 4-year transition period. CMS will continue to use the specialty supplemental survey data for determining practice expenses for medical oncology
• Finalizes the proposal to stop making payment for consultation codes other than the G codes that are used to bill for telehealth consultations
• Adopts in part the proposal to increase the equipment utilization percentage used for setting practice expense (PE) for expensive equipment valued at more than $1 million from 50 percent to 90 percent.

The display copy of the final rule can be accessed here . The final rule with comment will be published in the November 25, 2009 Federal Register. While provisions of this final rule are expected to go into effect January 2010, CMS will accept comments on designated provisions of the final rule with comment period until December 29, 2009. The new payment rates and policies will apply to services furnished to Medicare beneficiaries on or after January 1, 2010.

Our preliminary analysis of the MPFS final rule identified several additional provisions of importance to physician offices:

• Implements a conversion factor of $28.4061 based on the statutory SGR formula, a reduction from the CY 2009 conversion factor of $36.0666
• Implements work, practice and malpractice relative value unit reductions that will redistribute payments under the fee schedule. As a result of these changes, specialists' service codes, including drug administration codes, among others will experience significant cuts while primary care services, including visit codes, will experience increases.
• Finalizes several of the proposed changes to the Competitive Acquisition Program (CAP), such as instituting a quarterly payment update instead of an annual update, narrowing the CAP drug list, and limiting the geographic area to the 48 contiguous states (as a temporary solution). The rule does not indicate timelines for the return of the CAP.
• Finalizes the proposal, per MIPPA, to create new benefit categories for cardiac and pulmonary rehabilitation services and for chronic kidney disease education
• Finalizes the proposal to increase by 1.0% the current composite rate for End Stage Renal Disease (ESRD) services to $135.15 and continues the drug add-on payment amount of $20.33 per treatment for services furnished on or after January 1, 2010
• Continues the threshold percentage of 5% for the Widely Available Market Price (WAMP) and Average Manufacturer Price (AMP). The Office of the Inspector General (OIG) will continue to compare ASP to WAMP and AMP.
• Finalizes changes to the PQRI program, such as adding an additional 30 individual PQRI measures and six measures groups on which individual eligible professionals (EPs) may report; codifies MIPPA requirements that will enable group practices to qualify for a 2010 PQRI incentive payment based on a determination at the group practice level, rather than at the individual EP level; and adds an electronic health record (EHR)-based reporting mechanism which will allow EPs to count their submission of EHR-based measures toward their eligibility for a PQRI incentive payment.
• Finalizes proposed changes to the E-prescribing Incentive Program including simplifying the reporting requirements for the electronic prescribing measure. For 2010, the rule requires EPs to report an e-prescribing code only when a patient visit results in an electronic prescription being placed. In addition, the rule implements a MIPPA provision that enables group practices to qualify for a 2010 e-prescribing incentive payment based on a determination at the group practice level, rather than at the individual EP level.

As the healthcare reform debate unfolds, it is unclear the mechanism and scope of the approach Congress will take to address the SGR-imposed cuts scheduled to take effect next year. However, Congress is expected to take action to either permanently address this revolving issue, or at a minimum, make another temporary fix to avoid significant cuts in Medicare physician reimbursement in 2010.

CBO Analysis of House Health Reform Bill

A Congressional Budget Office (CBO) analysis published subsequent to the bill's release yesterday estimates the bill's cost at $894 billion between 2010 and 2019, and forecasts it would reduce the federal deficit by more than $100 billion during the same period. Of the bill's costs, $425 billion would be incurred in federal outlays for Medicaid and CHIP and $605 billion would go out in federal subsidies provided to purchase coverage through the new insurance exchanges.

The bill's cost would be funded via combination of $426 billion in cuts to Medicare, Medicaid and other federal health programs and a surtax on the "wealthiest Americans" - a 5.4% surtax on the adjusted gross income of individuals making more than $500,000 and married couples making more than $1 million, which is higher than the thresholds in the previous version. Additional new revenue raisers would include a 2.5% excise tax on certain medical devices, penalties from individuals failing to obtain or provide insurance coverage and a payroll tax on employers failing to offer health insurance to employees.

CBO estimates the public plan option approach included in the bill would likely charge similar or even higher premiums compared with private plans in the new insurance exchanges, and forecasts that the public plan option would attract only 6 million enrollees.

House Health Reform Bill -- More Trick than Treat? New concerns grow

House Speaker Nancy Pelosi (D-CA) unveiled today a health reform bill that includes a public plan with negotiated rates, expansion of Medicaid to people making up to 150 percent of the federal poverty level, and a provision requiring HHS to negotiate drug prices under Medicare. The public plan language does not appear to represent a more partisan approach and has already brought new concerns from moderates.

While the projected costs of the reform is now reduced to $900 Billion, this House proposal creates new significant concerns for health care providers but has some "carrots" for seniors related to the Part D Donut Hole. Below are highlights of some key components and changes in the some 2,000 page House health reform bill released today:

• Public Health Insurance Option - Modifies policy so that the Secretary shall negotiate rates with providers that participate in the public plan and provides greater clarity regarding the opt-out policy for providers.
• Medicare Part D Donut Hole -- Begins Closing the Medicare Part D Donut Hole Immediately. Effective January 1, 2010, closes the Part D donut hole by $500 and institutes a 50 percent discount for brand-name drugs in the donut hole. Gap in coverage is completely eliminated by 2019.
• Medicare Part D Price Negotiation – There is a provision which would allow the Secretary of HHS to negotiate with manufacturers on prices of drugs within the Medicare Part D program.
• Medicare Physician Reimbursement (SGR) Issue - Removes overhaul of the Medicare physician payment formula (SGR) which the House indicates will be permanently reformed by separate legislation this year.
• ASP – There was an amendment accepted in the Energy and Commerce Committee which would have excluded distribution prompt pay terms, up to 2% of WAC, from the ASP calculation. This would correct a key issue that artificially reduces and skews Medicare Part B drug reimbursement. Unfortunately, this provision is not included in this new version but we hope this issue will be addressed in final health reform legislation.
• AMP – The AMP provision has not changed and reimbursement remains at 130% of AMP to calculate the FUL which is considerably less than the Senate version.
• Follow-on Biologics. House version continues to create an FDA licensure pathway for "biosimilar" generic biological products, allowing these products to come to market and compete with brand-name biologics. The biosimilar product must have no clinically meaningful differences in safety, purity or potency from the reference product, and may not be licensed until at least 12 years after the date that the brand-name product was licensed.
• Comparative Effectiveness Research (CER) - Increases the independence of the Comparative Effectiveness Research Commission: Comptroller General appoints the commission, no longer established by the Secretary of HHS; establishes a separate independent funding stream for the Commission; ensures that the Commission is able to make reports without HHS review. Improves protections to ensure that sub populations are appropriately accounted for in research study design and implementation and requires a researcher with expertise in racial and ethnic minority health research to be on the Comparative Effectiveness Research Commission. Clarifies that comparative effectiveness reports are not considered as mandates for payment, coverage or treatment and that no federal officer or employee will interfere with the practice of medicine.
• Vaccines – Earlier versions of the bill would have transferred coverage for all vaccines from Medicare Part D to Part B. This language has been removed.
• Expansion of 340(B) – Earlier versions of this provision included creation of a new “acute care” class of trade and included language would require manufacturers to “deduct” prompt pay discounts. While the expansion of the 340(B) program has remained, the language related to acute care class of trade and prompt pay discounts has been removed.

House Bill likely to be released Thursday -- Will it try to fill the donut hole?

Breaking news from Washington insiders:
House bill language is expected to be released Thursday morning.

There will be a number of key issues to watch for in the House bill and one that impacts patient access is the Medicare Part D Donut Hole. Democratic House leaders have been focused in trying to accelerate the "closing" of the Medicare Part D Donut Hole which leaves seniors with significant out of pocket expense until they reach the catastrophic benefit. One plan would begin to reduce the Part D copayments (or donut hole) as early as January and phase out the coverage gap in 10 years.

The bill that cleared Energy and Commerce would have phased out the donut hole over 15 years beginning in 2011. The underlying bill also shaves $500 from the cost of drugs provided in the coverage gap.

AARP estimates that about 26 percent of Part D beneficiaries who fill one or more prescriptions and receive no other assistance fall into the donut hole and spend four months in the coverage gap on average.

Few issues are as important to patient access for oral and self-administered drugs as the Medicare Part D Donut hole issue so this will be a key issue senior may rally around.

Moderates express concern for Senator Reid's "Public Option"

Moderate Democrats have responded with concern today to Senate Majority Leader Harry Reid's decision to bring to the chamber's floor a health-care bill containing a "public option" government insurance plan. Some have said they still do not know whether they could support a public option on a final vote even if they were supportive of the procedural motion to bring the measure to the floor. But many moderate remain opposed to any form of government-run insurance plan even if it has a state "opt-out" option.

If the Senate bill advanced next month it is still possible the opt-out provision could be cut from bill during Floor debate. Some moderate Democrats are more comfortable with the "trigger" approach that Senator Olympia Snowe (R-ME) has advocated, saying that a variant of a public plan is more likely to win 60 votes. Under Snowe's approach, a public plan would be available only in states where private companies do not offer policies at broadly affordable rates which creates a trigger to incent cost reductions by insurers.

As of today, Washington insiders report that Senator Reid is short of the votes to pass a government-run public option in the Senate bill. Several moderate Democrats including Sens. Ben Nelson (D-NE); Evan Bayh (D-IN); and Blanche Lincoln (D-AR)have so far declined to say if they'll support a motion to begin debate on the bill.

Its back: "Public Option" Scenarios Take Center Stage Again

A true "Public Option" was all but dead just a couple of weeks ago with the only potential compromise approach that appeared possible being a "trigger" option for a government plan only if cost savings targets were not reached as has been proposed by Senator Olympia Snowe (R-ME). But in the past two days we have seen support re-emerge for a more "robust public option" perhaps from both the House and Senate.

It has been reported that President Obama told Democratic leadership at the White House Thursday evening that his preference is for the "trigger option" championed by Snowe which is a sign that the President wants to maintain a sense of bipartisanship around the health reform plan. At that meeting, Obama did not sign on to a plan being floated by Senate Majority Leader Harry Reid (D-NV) to include a different variation of the public option in the Senate bill — a plan that would create a national public plan but allow states to “opt out.”

One of the biggest concerns with a public option is the concern that payment rates and incentives might be based off of the Medicare system which would be a disaster for health care providers. Given this sensitivity expect the public option debate to continue to focus on the details as the various options are considered including both the "trigger option" and the "state opt out".

The October Kaiser Health Tracking Poll finds 57 percent of the public say they favor the creation of a “government administered public health insurance option,” however the poll indicates that this support dips to one-third (32%) when initial supporters are told that such plans “could give the government plan an unfair advantage over private insurance companies.” However, support for the public plan rises to two-thirds (65%) when initial opponents are told that public plans would be “a fallback option" similar to the "trigger option".

As the health reform debate continues into November and perhaps beyond it will be critical for health care providers to focus on the specifics of a public option with the hope that the flaws in the current Medicare system will not be expanded.

Politics vs Good Health Policy: Senate unable to gain votes to fix Medicare SGR Physician Payment Issue

Despite widespread, bipartisan acknowledgement that the Medicare Physician Reimbursement issue (known as Sustainable Growth Rate or SGR) needs to be fixed, today the Senate failed to assemble the votes necessary to move this issue forward. Feels like politics at play versus taking advantage of the larger health reform debate to address issues that have needed to be fixed for several years.

Due to the flawed SGR issue, physicians will receive a 21% cut in Medicare reimbursement on January 1st and the Senate was attempting to permanently fix this issue separate from health reform since the issue was skewing the debate. The Senate Finance Health Bill does have a one year fix which would (once again) defer this issue which is a huge distraction and frustration since the "cost" to fix the issue grows each time a temporary fix is made.

Today, a vote on the motion to invoke cloture on the motion to correct this issue (S. 1776) failed in the Senate, 47-53. 60 votes were needed to move forward.

Republicans and some Democrats questioned the price of the Medicare measure -- $247 billion over 10 years -- and said proponents haven't offered any new revenue sources or spending cuts to offset the cost. Supporters of the bill say the sharp payment cuts, unless reversed, would encourage doctors to stop seeing Medicare patients.

Since a temporary fix is needed we will likely hear more debate on this issue in the remaining weeks of this year given the looming January 1st massive reimbursement cut.

New "Public Options" and Focus on "affordability" as health reform debate continues

This week we are seeing new reports to create a "middle ground" on the public option debate -- perhaps focused on scenarios such as the "Trigger Option" proposed by Senator Olympia Snowe (R-ME). The purpose would be to create more incentives for private payers to reduce costs more quickly as a means to prevent having to compete with a public option.

Reports today are that Baucus and other Senate Finance Committee members are discussing ways to modify their health reform bill to make it more affordable to beneficiaries, including the possibility of adjusting the minimum coverage of the lowest (bronze-level) plan down to 60 percent actuarial value from its current 65 percent. The risk in such changes is that while they reduce the cost of health insurance coverage they also typically reduce the scope of coverage and can create new issues in terms of out-of-pocket costs for patients. Senators are also discussing stronger incentives and penalties for individuals which would help increase the number of insured.

On Monday, Baucus also released the legislative text and report language for the health reform bill passed by Finance Oct. 13. http://finance.senate.gov/sitepages/leg/LEG%202009/101909%20America%27s%20Healthy%20Furture%20Act%202009%20Leg.pdf
Based on Baucus' comments the area we may see significant change to bill would relate to affordability concerns.

Health reform debate continues but Senate delays SGR repeal

Senate Democrats were not able to gather necessary votes to permanently repeal Medicare's Sustainable Growth Rate (SGR) which for many years has led to looming cuts in physician payments that expand each year. The issue began to become confused by the media since it has a high price tag of $240 billion but in reality would only prevent a looming pay cut for physicians. However, AARP is now also weighing in to support the repeal of SGR on a permanent basis which could help draw new support and adds new weight to efforts by the AMA. Currently, the Senate Finance health reform bill draft has only a one year fix of SGR.

On a related note, Senate leadership did announce it will allow a limited number of amendments to be introduced which is expected to open the door for Republicans to seek votes on medical malpractice reform and other issues that are considered to be gaps in health reform legislation. It is not clear what other issues will be considered but it appears we have several weeks more of health reform debate in both the Senate and the House.

On the House side, Washington insiders report that the House will likely not vote on health reform until after the elections but before Thanksgiving. However, the House will likely unveil a bill next week and it may include different options related to the controversial public option. We expect the House bill will end up being deficit neutral or better and the cost will be under $900 billion.

Will we have health reform legislation by Thanksgiving? Possible. But I am betting it will be December.

Former Senator Daschle addresses HDMA meeting in Orlando on health reform

Former Senator Daschle spoke today at the HDMA annual leadership meeting in Orlando, FL and indicated that health reform has moved to the next level and says the odds of seeing it pass this year are greater than 50/50. He pointed to key areas of consensus to the reforms being proposed but acknowledged that debate on issues such as the public option have taken focus away from areas of consensus.

He spoke to the three major areas of reform:

• Insurance Reform -- this is the area of consensus and where the proposed health reforms will have the biggest impact
• Payment Reform -- spoke that this is the hardest area and where we have made mistakes int the past; reforms proposed begin to help create new models but it would be more than a decade before those efforts have significant impact
• Delivery Reform -- this is also a challenging issue and like payment reform will take a much longer time to develop

Daschle commented that the Senate Finance Committee work has been the most important work on health reform and that the Senate work will be the most likely vehicle for health reform. He commented that it could include health care co-ops and perhaps even triggers related to public options as proposed by Olympia Snowe (R-ME).

When asked about the Medicare Physician Fee Schedule Sustainable Growth Rate (SGR) bill which was separately proposed in the Senate this week he did predict that it has better than even odds to pass separately. This will be voted by the Senate on Monday.

Update: Will Senate Move Forward with Medicare Doc Fix?

Breaking news: This afternoon Senator Reid moved forward with a bill that would address the Medicare physician payment issue separately from health Reform. As reported previously, S-1776 was introduced this week to provide for the update under the Medicare physician fee schedule for years beginning with 2010 and to sunset the application of the Sustainable Growth rate (SGR) formula. Senator Reid filed cloture on the motion and by unanimous consent, the cloture vote on the motion to proceed to S. 1776 will occur at 5:30pm on Monday, October 19.

What is the probability that this Medicare Doc Fix issue will be addressed separately and permanently? Too early to tell at this point but there is bipartisan support to (finally) address this issue permanently.

Senate Democrats move to fix Medicare Physician Payment Issue

In a surprise move today, Senate Democrats are making a push to separate the troubling Medicare physician fee schedule issue from health reform. There is bipartisan support to address the issue but the cost of doing so has grown over many years. Now the cost of permanently fixing the Sustainable Growth Rate (SGR) flaw in the Medicare Physician Fee Schedule artificially adds over $200 Billion to the cost of health reform which is why only another one-year temporary fix was included in the Senate Finance Committee's health plan.

Today, Senator Debbie Stabenow (D-MI) introduced the "Medicare Physician Fairness Act of 2009" (S. 1776). The bill would repeal permanently the sustainable growth rate (SGR) payment methodology. Senator Stabenow requested that the bill be considered immediately under a procedure called Rule 14, which waives Committee consideration of the bill. Senate Majority Leader Harry Reid will attempt to bring S. 1776 before the full Senate tomorrow. However if there is an objection, Senator Reid will file a cloture motion which would limit debate and require 60 votes.

Note that our understanding is that this does not have an offset, the Senate will be required to waive the Budget Act prior to final passage which also requires 60 votes. From a health policy perspective, separately addressing this Medicare issue makes sense since the issue has been deferred for many years with one year temporary fixes and has basically led to no increases in Medicare reimbursement for physicians for close to a decade.

Senate Finance Committee approves proposed health plan with 14-9 vote today including Olympia Snowe (R-ME)

Today, the Senate Finance Committee approved an $829 billion plan to overhaul U.S. health care which now moves the measure forward for a full Senate debate. The vote passed 14-9 and did include one Republican, Senator Olympia Snowe (R-ME), in a vote that otherwise followed the party line.

Senate and House Democratic leaders must now merge the bills and schedule floor debates. After each chamber votes, they’ll have to reconcile their measures but the Senate Finance Committee version is the most moderate reform. Senate Majority Leader Harry Reid will need to meld the finance panel bill with one approved by the Senate health (HELP) committee in July which could create challenges and debate within the Democratic party. The Senate finance version does not include a so-called "public option".

With today's action, the probability for health reform moving forward before the end of the year has advanced significantly and the Senate floor debate will be critical in further shaping this phase of health reform.

In France, Insurers Have to Pay Claims in 3 Days? (From MGMA Meeting)

Today at the Medical Group Management Association (MGMA) national meeting, author T.R. Reid drew laughs from a crowd of over 10,000 practice administrators when he said that, in France, Insurers must pay claims to providers within 3 days. What a perfect example of some of the costly administrative gaps that exist in the US Health care system. In light of the economic crisis this past year and challenges in access to capital, the current US health care system and its complex and inconsistent claims payment systems take on even more significance.

Also at today's conference was bioethicist Ezekial Emanuel, MD who had several key quotes that were then shared via Twitter real time to MGMA members:

• "The problem in the system is not that we don't have the right technologies... it's how we connect with patients."
• "There needs to be a shift from volume-driven care to coordinated care."
• "The holy grail is High Touch Medicine: access, quality and controlled cost growth."

MGMA urged its members to stay involved and also provided an update on health reform efforts since it is likely that grassroots type input will be important once we move to potential floor amendments on a wide range of key issues impacting physician practices in particular that are not addressed in the current Senate health reform proposal.

Senate Finance Committee Votes Tomorrow on Health Reform

On Tuesday, Oct. 13, the Senate Finance Committee will vote to approve its version of healthcare reform, which includes Chairman Max Baucus' redrafted legislation as amended during committee deliberations.

The Congressional Budget Office (CBO), the official scorekeeper of legislation, has tallied the cost of the bill at $829 billion. This is less than the $900 billion that the president and Baucus, D-Mont., were seeking. The bill also reduces the budget deficit by $81 billion over 10 years. Senate Majority Leader Harry Reid, D-Nev., will meld this legislation with the bill approved in July by the Health, Education, Labor and Pensions Committee. The combined version will then be sent to the CBO for an official cost estimate necessary prior to consideration by the full Senate.

Since the Constitution mandates that legislation with tax revenues originate in the House, Sen. Reid is expected to "call up" for consideration a House-passed bill related to the AIG bailout and substitute the healthcare reform language for that currently contained in the bailout measure. Republicans are expected to object to consideration of the bill, forcing Reid to file a cloture motion to cut off the filibuster and move to consideration of healthcare reform by the full Senate. This will require 60 votes. If Sen. Reid succeeds, anywhere from hundreds to more than 1,000 amendments could be offered for consideration.

Since most analysts believe that the majority of the re-crafted Senate bill will be derived from the Finance bill, there is an opportunity to reach out to Senators related to specific concerns such as the cuts in Medicare physician reimbursement and to postpone CME proposed cuts that are to be implemented on January 1st since some of those changes in RVUs include dramatic cuts in reimbursement that could impact patient access to care.

The Finance bill only provides a 0.5 percent Medicare payment increase in 2010 and then reverts to massive cuts of approximately 25 percent in 2011 and beyond. There is hope that amendments will be offered during the Senate Floor Debate to address some of these key issues.

Groups such as the Medical Group Management Association (MCMA) and the Community Oncology Alliance (COA) have tools on their websites to facilitate access to members of Congress on these issues.

From AMCP Today: Howard Dean and Bill Frist both predict health reform legislation to pass

At the Academy of Managed Care Pharmacy (AMCP) meeting in San Antonio, TX, both former Gov. Howard Dean and former Senator Bill Frist predicted health care reform would pass this fall. Frist predicted that key votes would occur next week.

Despite their very different political background the two physicians and former politicians agreed on many of the key items of health reform. The biggest difference was whether health reform needs a public option.

• Dean advocated for a public option to be included so that there is a "real choice". He believes that having a modest sized but true public option is important to create change in the market and he felt that health insurance companies would rise to that challenge. He feared that without a real public option of some form that in order to have change in the cost model and incentives we would need a system like Switzerland where private insurers were like a publicly held, highly regulated utility.
• Frist presented a case that a public option would be modeled from Medicare payment system which is flawed and would leave a significant gap for physicians, hospitals and other providers. He also presented concerns that more people would opt into the public plan and a public plan that is too large "is not real choice". Frist predicted that we would probably not see a public plan included in health reform since it is not included in the Senate Finance health reform package.

Both agreed that this really is just the beginning of health reform changes -- not the end and both acknowledged that many of the key issues to truly change the incentives of the systems and the "cost curve" that further change and innovation would be needed.

Senate Finance to Vote on Health Reform on Tuesday (Oct 13th)

The Senate Finance Committee will vote next Tuesday, Oct. 13, on the pending health reform bill based on announcements today from Senate Finance Committee Chairman Max Baucus (D-MT). The announcement came one day after a Congressional Budget Office (CBO) analysis projected that the bill would cost $829 billion and reduce federal deficits by a total of $81 billion over 10 years which is one of President Obama’s main requirements for health reform. The bill would also expand coverage from 83 percent to 94 percent of non elderly Americans over 10 years.

Republicans including Senator Charles Grassely (R-IA) have cautioned that the celebration of reducing the deficit "masks who pays the bills" and that the package includes hundreds of billions of dollars in new taxes and fees. Expect to see a long day Tuesday as Senate Finance members will likely have many questions regarding the CBO analysis and projections released yesterday.

While the Senate Finance Health Reform was developed by a bipartisan team, many project that the final votes for health reform within the Senate Finance Committee may end up appearing largely partisan.

CBO Releases cost estimate for Senate Finance Reform

Breaking news. This afternoon, the Congressional Budget Office (CBO) issued a letter to Senate Finance Chairman Baucus (D-MT) regarding the cost of his health reform proposal (or Chairman's Mark). The CBO concluded that the bill would increase federal spending by $829 billion over 10 years but would be offset by enough spending cuts and tax increases to reduce the budget deficit by $81 billion over 10 years.

The fact that the plan does reduce the deficit over the next 10 years means that it meets a key objective for health reform and the Finance Committee will now move to consideration of their final bill perhaps this week but more likely next week.

Senate Finance Health Reform Bill Continues to Move forward – CBO to estimate the cost

The Senate Finance Committee moved health reform to the next level Friday by completing the mark-up process and sending it to the Congressional Budget Office (CBO) for a revised score. The CBO score with its vast array of assumptions will play a key role in determining the next steps for health reform. Once a preliminary CBO score is released the Senate Finance could move forward as early as next week depending on what adjustments must be made.

Why do many feel the Senate Finance proposed reforms have the best chance to pass?

• Plan does not include a public option. Senate Finance voted down two separately proposed amendments to add a public plan option this week. Given the public concerns related to a public option, the Senate Finance reforms now appear the most moderate and have some bipartisan support.
• The plan does include a popular incentive to all health plans to vary premiums and reward consumers who participate in wellness programs.
• The plan does address the looming 2010 Medicare Physician Fee Schedule issue (which would reduce Medicare physician reimbursement by over 20% starting Jan 1st) which has bipartisan support and must be addressed this year.
• Includes bipartisan key health insurance reform changes such as prohibiting exclusions for pre-existing conditions.

However, the bill does include controversial issues such as the new Medicare Commission (known as the “Super MedPAC”). Many key issues are not addressed as part of the plan so we would expect to see a significant range of floor amendments offered.

Senator Baucus’s proposed plan appears to balance many of the most controversial issues and it looks well positioned to move forward in the coming weeks in some form. As the work of the Senate Finance Committee is merged with the efforts of the Senate HELP committee we do expect that biosimilars will be added to the Senate version of reform.

Key Questions For Next Week:

• Will the Senate Finance bill meet the President's budget related requirements?
• Will it have any bipartisan support such as Sen. Olympia Snowe (R-ME)?
  

Breaking News: Congress expected to delay new requirements for DME Suppliers

Perhaps as early as tonight, Congress will likely finalize legislation to delay implementation of new requirements for Durable Medical Equipment (DME) suppliers until January 1, 2010. This is an important change, particularly for local medical suppliers and community pharmacies, since many local providers would not be able to continue to provide Medicare beneficiaries with access to DME and related medical supplies based on the new requirements.

CMS issued a release today that new requirements for suppliers of medical equipment and supplies starting today unless there was legislative action. The House passed a bill last night (H.R. 3663) to delay the DME accreditation requirement for pharmacies until January 1, 2010.
Reports now anticipate that the Senate will pass legislation as early as this evening to delay the accreditation requirement for pharmacies.

Why is this delay important for patients? This would be good news for Medicare patients that access any type of DME or related supplies as they can continue to use their existing providers. Lets hope Congress takes temporary action today and then permanently excludes pharmacies and other community providers as part of health reform.

Senate Finance Votes Against Public Option

Breaking News. In an important advance for a more moderate, bipartisan health reforms the Senate Finance Committee Tuesday voted against including a "public option" provision in the bill. While the media is reporting this as some form of "set-back" related to health reform, in reality this may prove to be a critical victory towards advancing the more moderate health reform being proposed by Senator Max Baucus (D-MT). The panel rejected a proposal by Sen. John Rockefeller (D-WV) 15-8, and a second public option proposal by Sen. Charles Schumer (D-NY) was defeated 13-10. The votes clearly support the more moderate approach taken by the committee chairman, Senator Max Baucus thus creating new hope for bipartisan health reform legislation. The Senate Finance Committee continues it work today.

The Donut Hole -- Can we affort to fill it as part of health reform?

One of the most hotly debated issues being considered by the Senate Finance Committee relates to efforts to close the Part D "Donut Hole" coverage gap as part of health reform. The senior lobby is urging lawmakers to go further than the narrowing of the donut hole that has been proposed based on savings from PhRMA. This week Senator Bill Nelson's (D-FL) amendment to fill the donut hole failed 10-13 with three Democrats, including Senate Finance Chair Max Baucus (MT), joining the GOP members in opposing the measure. Nelson's amendment would have required an additional health reform contribution from drug companies beyond the $80 billion deal that Baucus and the White House reached over the summer.

Despite it's failure, we expect to see this as a key issue when legislation comes to the full Senate floor. We may see seniors weigh in heavily on this issue but the concern is of course the cost of this change and even whether we need to expand a program that has high marks overall from beneficiaries.

While many want to close the donut hole eventually, including President Obama, the question is how to balance cost considerations to fund such a change. Before asking for a final vote Baucus also said he supports closing the gap, but said staff needed time to find a “more appropriate way” to do so in terms of offsets. There is concern that dramatic changes could lead to premium increases that would negatively impact all seniors which is difficult to project or estimate.

The "Donut Hole Debate" has likely only just begun as efforts to bring senior on board with health reform overall. For many seniors, particularly those with chronic disease, the donut hole creates significant patient access issues each year so this is a sensitive topic for many interested parties.

Senate Finance Considers Key Amendments to Health Reform

With over 500 amendments for consideration by the Senate Finance Committee on Health Reform, progress was made to go through proposed changes and support was reached for some significant modifications or additions to the Chairman's Mark released last week by Max Baucus (D-MT). While the progress has been slow, it does feel like we are moving toward a Senate health reform bill that will have enough support to move forward. Key amendments passed by the Committee so far, include:

• Biosimilars Reimbursement. Offered by Senator Schumer (D-NY), an amendment that would reimburse biosimilars at the average sales price (ASP) plus the innovator/brand product's 6 percent add on, which is assumed to be greater than the biosimilar's own 6 percent. Senator Schumer had originally filed language that would have assigned the same billing codes to branded and biosimilar products but that language was removed in the modified proposal. PhRMA and BIO, reportedly, supported this amendment as modified. The amendment, as currently understood, contradicts some earlier press reports suggesting reimbursement for the innovator and biosimilar would be determined based on a volume-weighted average of the products. This one will be an important one to watch final bill language.
• PBM Transparency. Offered by Senator Cantwell (D-WA), an amendment that would require PBMs operating in the insurance exchanges to disclose to HHS information regarding: (1) the percent of all prescriptions provided through retail pharmacies compared to mail order pharmacies, and the generic dispensing and substitution rates in each location; (2) the aggregate amount and types of rebates, discounts, and price concessions that the PBM negotiates on behalf of the plan and the aggregate amount of these that are passed through to the plan sponsor; and (3) the average aggregate difference between the amount the plan pays the PBM and the amount that the PBM pays the retail and mail order pharmacy.
• Medicare Commission. Offered by Senator Rockefeller (D-WV), an amendment that would make binding the recommendations of a Medicare commission to lower spending growth unless the Senate voted by a two-thirds majority to reject them. The new commission's recommendations would have to be accepted by the president before being voted on by Congress.
• Patient-Centered Outcomes Research Institute. Offered by Senator Grassley (R-IA), an amendment which would remove cabinet secretaries and other high-ranking government officials from serving on the board of the Patient-Centered Outcomes Research Institute
  

Was anything key rejected? Yes and as is being widely reported, Baucus, voting along with Republicans, rejected an amendment that would have nullified the PhRMA accord reached earlier this year with Baucus and the White House. The amendment, offered by Senator Nelson (D-FL), would have scrapped the PhRMA agreement and would have made Medicaid-instead of Medicare- responsible for paying for low-income seniors' drugs; it would also eliminate the Part D coverage gap (or donut hole). The cost of the amendment would have been offset by requiring drug manufacturers to provide rebates to dual-eligible enrollees of Part D plans. It was estimated to produce $106 billion of revenue (after filling the doughnut hole, $50 billion would be left over).

Remember this is only what is included in the Senate side and we have not seen any legislative language yet and the Senate Finance Committee will resume its work on considering other amendments on Tuesday.

Senate Debates Proposed Health Bill -- Baucus adds new changes

Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, opened the debate on healthcare reform with additional changes designed to expand support for working-class families and impose new obligations on the insurance industry. Sen. Baucus announced he was adding $50 billion to draft legislation to help those who would be required to purchase insurance. The changes would expand subsidies for individuals and families with incomes up to four times the government's poverty level ($43,320 for individuals and $88,200 for a family of four) that do not have access to health insurance. The debate and discussion feels like it will be slow with more than three hours of opening statements by both Republicans and Democrats. Committee members offered 564 amendments.

Other key proposed changes include:

• Proposals to increase tax credits for middle-income families that buy health insurance
• Limits to how many people would be subject to a new excise tax on "high-end" health plans so that high risk works like fire fighters are excluded.
• New proposals to expand discounts from the pharmaceutical industry beyond the PhRMA proposed savings.
• Proposals to expand Medicaid vs Medicare Part D for low-income seniors to further reduce costs
• Additional changes that would require PBMs to disclose rebates from drugmakers to clients

Amendments could be voted on as early as this week.

Baucus Plan Includes Doctor Payment Disclosure Regulations (Known as Sunshine Act)

Tucked into the details of the Senator Baucus' draft health reform bill is a measure that would require drug and medical device companies to publicly report payments or “transfers of any value, with limited exceptions” to physicians or teaching hospitals. While the actual bill is not yet available, it appears that this provision will impact both physicians and manufacturers. The scope of the Senate provision is unclear but the House reform bill would require reporting of payments to a broader category of recipients, including all hospitals, physicians, pharmacies, health insurers, continuing medical education sponsors, researchers and patient and professional organizations.

The proposal is based on a bill introduced by Sen. Charles Grassley (R-IA), the committee’s ranking Republican, which would require drug makers to publicly report gifts to physicians once the aggregate amount over a year totals $100. Currently, the House bill sets the threshold at $5. This language will be another aspect of health reform to watch as it could create new administrative burdens of physicians as well as manufacturers.

Will the Senate be able to drive toward bipartisan health reform?

Challenges continue to grow for some form of bipartisan health reform but the debate over health care appears far from over and may last until December.

Today, reports from Capitol Hill indicate virtually no Republican support for Senate Finance Chair Baucus (D-MT) and the health reform mark he released yesterday. Olympia Snowe (R-ME) is the only potential Republican name that may consider supporting the proposed Finance bill. Republicans may not even offer any of the other amendments to the proposed Senate Finance mark based on reports today. What does that mean? Basically, the best chance for bipartisan health reform legislation might start with a fresh, blank piece of paper.

The key areas of consensus remain focused on insurance reforms but virtually all other issues are being debated due to the cost issues with such reforms.

Senator Baucus Releases Draft Health Reform Legislation

Senator Baucus Released today the Chairman’s “Mark” (or draft legislation): America’s Healthy Future Act of 2009. While today in Washington the effort feels partisan, it is possible that this legislation can be adapted for bipartisan support.

Key highlights include the following:

• Individual Insurance Coverage Mandate: Starting in 2013, all U.S. citizens and legal residents would be required to purchase coverage through the individual market, a public health program (e.g.,Medicare, TRICARE), an employer, or a larger market exchange.
• Employer Obligations: While employers would not be required to offer health insurance coverage to employees, those employers with more 50 employees that do not offer health insurance would be required to pay a fee (often referred to as “pay-or-play”). The fee assessment would be capped for and the details of this will be critical. The effective date of this provision would be January 1, 2013.
• Creation of the Consumer Operated and Oriented Plan (CO-OP): The Chairman’s Mark does not offer a "true" public plan option, but does authorize $6 billion in funding for the creation of the Consumer Operated and Oriented Plan (COOP). The CO-OP would be comprised of non-profit, member-run health insurance companies that serve individuals in one or more states. These plans would establish state-based health insurance exchanges to help facilitate access to coverage for individual and non-group markets.
• Part D Drug Discount Program. Beginning in 2010, in order to have their drugs covered under Medicare, manufacturers would be required to provide a 50% discount off the negotiated price for brand-name drugs covered on plan formularies when beneficiaries enter the coverage gap. Beneficiaries are eligible provided they do not qualify for low-income subsidies, do not have employer sponsored coverage, or do not pay higher Medicare premiums under Part B or Part D.
• Medicaid Coverage for the Lowest Income Populations. Starting in January 2011, states would be given the option to cover non-elderly, non-pregnant adults (often referred to as childless adults) through a state plan amendment (SPA) at their current match rate. Effective January 1, 2014, the proposal would establish 133% of the federal poverty limit (FPL) as the new mandatory minimum Medicaid income eligibility level nationally.
• Medicaid Prescription Drug Coverage. According to the Mark, prescription drugs would become a mandatory Medicaid benefit for the categorically and medically needy effective January 1, 2014.
• Physician Reporting (Sunshine Provision). Under the Chairman’s Mark, a reporting requirement for payments to physicians would be required. Beginning on March 31, 2012, and each year thereafter, each manufacturer of a covered drug, device, biological, or medical supply would be required to electronically report information on payments or other transfers of value made during the prior year to physicians, physician medical practices (including group practices), and hospitals with residency training programs.
• New Fees. Under the Chairman’s Mark, an annual fee of $2.3 billion annually would be imposed on the pharmaceutical manufacturing sector beginning in 2010. The fee would be allocated by relative market share of covered domestic sales for the prior year. The fee would not be deductible for U.S. income tax purposes. Similar fees of $4 billion, $6 billion, and$750 million are proposed for medical device makers, health insurance sector, and clinical laboratory sectors, respectively. All proposed industry fees would be allocated by market share and start in 2010.
• National Pilot Program on Payment Bundling. This provision would direct the Secretary to develop a voluntary pilot program encouraging hospitals, doctors, and post-acute care providers to achieve savings for the Medicare program through increased collaboration and improved coordination of patient care by allowing the providers to share in such savings.
• Physician Fee Schedule Medicare Sustainable Growth Rate. The scheduled 21.5% reduction in Medicare physician payment rates in 2010 would be replaced with a 0.5% increase for 2010.

What happened to Bipartisan Support on the Senate Side? The original hope was that this bill would have bipartisan support among the G6, agreement was never reached. In addition, reports have indicated that three Democrats, Senator Jay Rockefeller (D-WV) and two other unnamed Democrats, have stated that they would not vote in favor of the bill as written. However, the next step of the process will be the mark-up by the Senate Finance Committee which is slated to begin on September 22, 2009. During the mark-up process, it is possible that the bill’s provisions could change to garner more bipartisan support.

Is Bipartisan Reform still possible?

Today, Senate Finance Chairman Max Baucus (D-MT) said there is “high probability” that he will release his health care reform bill Tuesday and that he hopes to simultaneously announce that it will be a bipartisan product. Clearly Baucus is working to bring the "gang of six" together and their has been focus this week to compromise together on the most controversial issues such as having more of a private co-op or exchange than a true "public option". After the Chairman's mark is released there will still be opportunities to modify the bill through the amendment process which does leave open the door for more bipartisan support. Other key issues being discussed include language intended to make sure that illegal immigrants can not participate in such coverage and also new funding to reduce medical malpractice lawsuits.
Stay tuned -- it will be a busy week for health care!

Baucus Healthcare Refom: New Details Released Today

Below is the framework of Baucus' healthcare reform approach, apparently released to the Senate Finance Committee "gang of 6" for consideration today. The official documents have not been released but new details (summarized below) have been widely shared across Washington experts today. It does includes some key imminent issues such as addressing the 2010 Medicare physician reimbursement cut (referred to as sustainable growth rate). It also includes some new "surprise" fees on health insurers, device industry and others.

The reported price tag comes in a $900 billion over 10 years and there is no "true" public plan option although the bill includes a number of insurance market reforms, including creation of state health insurance exchanges to help facilitate access to coverage for individual and non-group markets. The bill includes an individual mandate for coverage, beginning 2013, but would not require employers to provide coverage for employees (although employers with more than 50 employees must "pay" if they don't "play" per framework below).

The framework also creates/makes improvements to value-based purchasing programs for hospitals, physicians, home health agencies and SNFs, among other providers, and would facilitate payment bundling approaches through pilot programs. It also includes payment changes for some DMEPOS (e.g., oxygen, power wheelchairs, etc.). The framework also includes increased emphasis on industry transparency (e.g., Rx drug sampling reporting requirements) and fraud and abuse, including imposition of new fees on manufacturers.

Key highlights being reported today include the following proposals (please note the actual bill language has not been released):

• Part D Drug Discount Program. Beginning in 2010, in order to have their drugs covered under Medicare, manufacturers must provide a 50%discount off the negotiated price for brand-name drugs covered on plan formularies when beneficiaries enter the coverage gap. Beneficiaries are eligible provided they do not qualify for low-income subsidies, do not have employer sponsored coverage, or do not pay higher Medicare premiums under Part B or Part D.
• Medicaid Coverage for the Lowest Income Populations. In January 2011, prior to the expansion, states would be given the option to cover non-elderly non-pregnant adults through a state plan amendment (SPA) at their current match rate. Effective January 1,2014, the proposal would expand Medicaid income eligibility levels nationwide.
• Prescription Drug Coverage, Medicaid Rebates and AMP. Prescription drugs would become a mandatory Medicaid benefit. The status of drugs used to promote smoking cessation, barbiturates, and benzodiazepines would be changed from "excludable" to "non-excludable." Medicaid prescription drug rebates would be applied to Medicaid managed care organizations. Similarly, the rebates would be applied to new formulations of existing drugs, with an exception for orphan drugs. The rebate amounts would be increased, with the minimum rebate percentage for single-source and innovator multiple source drugs going from 15.1%to 23.1%and from 1 1%to 13% for generic drugs. For clotting factors and drugs approved by the FDA for pediatric use only, the rebate would be increased from 15.1%to 17.1%.The federal upper limit (FUL) would be changed to no less than 175% of the weighted average (determined on the basis of utilization) of the most recently reported monthly average manufacturer price (AMP).
• Hospital Value-Based Purchasing.The proposal would establish a value-based purchasing program for hospitals starting in 201 1. Under this program, a percentage of hospital payment would be tied to hospital performance on quality measures related to common and high-cost conditions, such as cardiac, surgical and pneumonia care. Quality measures included in the program (and in all other quality programs in this section) will be developed and chosen in cooperation with external stakeholders.
• Physician Value-Based Purchasing.This provision would make improvements to the Physician Quality Reporting Initiative (PQRI) program, including requiring all eligible health professionals to participate by 201 1, establishing payment incentives for physicians to appropriately order high-cost imaging services, expanding the Medicare physician feedback program, and penalizing physicians who utilize significantly more resources than their peers.
• CMS Innovation Center. This provision would establish an Innovation Center at CMS that would have the authority to test new provider payment models. Payment reforms that are shown to improve quality and reduce costs could be expanded throughout the Medicare program. The Innovation Center's funding would be set at $10 billion.
• National Pilot Program on Payment Bundling. This provision would direct the Secretary to develop a voluntary pilot program encouraging hospitals, doctors, and post-acute care providers to achieve savings for the Medicare program through increased collaboration and improved coordination of patient care by allowing the providers to share in such savings.
• Medicare Sustainable Growth Rate (SGR).The scheduled 21% reduction in Medicare physician payment rates in 2010 would be replaced with a 0.5% increase.
• Ensuring More Appropriate Physician Payment Rates.This provision would establish a panel comprised of health care providers, experts, and stakeholders to identify physicians' services that are overvalued in the Medicare physician fee schedule. In consultation with the expert panel, the Secretary would be required to adjust payments for those services that have increased at an unusually high annual rate without evidence supporting the clinical appropriateness of such growth.
• Prescription Drug Sample Transparency. Drug manufacturers and authorized drug distributors would be required to report to the Secretary information already collected pursuant to the Federal Food, Drug and Cosmetic Act. Specifically, manufacturers and distributors would be required to report the type and amount of drug samples requested by and distributed to practitioners, along with the practitioners' names, addresses, professional designations and signatures. The reported information would not be made publicly available.
• Pharmaceutical Manufacturing Companies Fee.Under this proposal, an annual fee of $2.3 billion would be imposed on the pharmaceutical manufacturing sector beginning in 2010. The fee would be allocated by market share.
• Medical Device Manufacturers Fee.Under this proposal, an annual fee of $4billion would be imposed on the medical devices manufacturing sector beginning in 201 0. The fee would be allocated by market share.
• Health Insurance Provider Fee.The proposal would impose an annual fee of$6billion on the health insurance sector beginning in 201 0. The fee would be allocated by market share.
  Clinical Laboratories Fee.Under this proposal, an annual fee of $750 million would be imposed on clinical laboratories beginning in 2010. The fee would be allocated by market share, except for small businesses.

Physicians and PQRI -- New updates from CMS

There have been lots of questions from physician offices regarding the 2009 Physician Quality Reporting Initiative (PQRI) and updates including questions regarding payments for prior years. To address this, CMS has just announced that they will host a national conference call (Q&A session) on Thursday, Sept 17, 2009 at 2:30 - 4:30 EDT. The topics covered on this national provider call will include:

• Status of the 2007 re-run and 2008 PQRI Incentive payments and feedback reports;
• How to access the 2007 re-run and 2008 PQRI feedback reports;
• Resources to assist eligible professionals; and
• PQRI and E-Prescribing Alternative Report Request Process

Following this presentation, the lines will be opened to allow participants to ask questions of CMS PQRI subject matter experts.

Educational resources are available on the PQRI dedicated web page located at, http://www.cms.hhs.gov/PQRI and specific to the e-prescribing incentive at http://www.cms.hhs.gov/ERxIncentive.

In order to receive the call-in information, you must register for the call in advance at http://www2.eventsvc.com/palmettogba/091709 additionally a transcript of the call will be available at least one week after the call at http://www.cms.hhs.gov/pqri on the CMS website.