Health Reform -- Consensus Grows in advance of recess

This week significant progress appeared to be made in both the House and Senate toward identifying areas of consensus on health reform.

Members of the House Blue Dog Coalition and the House Energy and Commerce Committee are working to complete a compromised before the August recess and have been working hard at committee mark-up on a bill. The compromise has not been released in detail but is reported to include:

• Additional cuts of up to $100 million from the total cost of the reform bill and a requirement that the bill cost under $1 trillion (excluding the SGR fix)
• Dilution of public plan language by explicitly stating provider participation in a public plan is optional, and Removal of the provision indexing payments for the public plan to Medicare, instead allowing the HHS Secretary to negotiate provider payment rates
• Enhanced language around value based purchasing for hospitals
• Language grandfathering existing state insurance exchanges (e.g., Massachusetts Health Connector)
• Clarification that states have the option for state exchanges
• Less generous individual subsidies for insurance coverage
• Exclusion of customary prompt-pay discounts extended to distributors from a manufacturer's calculation of Average Sales Price for Medicare Part B Drugs and Biologics
  

As a part of the accord reached between the Blue Dogs and House leadership earlier this week, the House will not hold a floor vote on reform legislation until September to allow all members time to review all reform bills. If the current timeline holds, we expect the three House committees working the reform legislation-Ways and Means, Education and Labor and Energy and Commerce- will merge their bills together and move to the House floor mid-September. The Ways and Means and Education and Labor Committees have already passed their reform bills.

The Senate is not expected to mark-up a reform bill under after the recess based on statements from Chairman Max Baucus (D-MT) and Senate leaders negotiating on reform legislation. Senate Finance members report the Congressional Budget Office (CBO) has scored its current working draft at less than $900 billion over 10 years. While the official score has not been released, the draft approach is estimated to cover 95 percent of Americans by 2015, boost employer-sponsored coverage, and fully offset and even reduce the deficit in the10th year.

House Health Reform Includes Important Technical Change to ASP

The House Energy and Commerce Committee had a marathon mark-up session last night on the health care reform bill (as further described in the following article), but one of the key amendments adopted late last night would exclude customary prompt-pay discounts extended to distributors from a manufacturer's calculation of Average Sales Price (ASP) for Medicare Part B Drugs and Biologics. This widely supported technical change would help to ensure consistent and accurate ASP calculations and is consistent with how prompt pay terms are reported to Medicaid. As currently drafted, it would sunset after 5 years and exclude prompt pay terms up to 2 percent of wholesale acquisition cost (WAC). Prompt pay legislation was introduced in the House by Rep. Green (D-TX) and Rep. Whitfield (R-KY). Similar legislation has been introduced in the Senate by Sen. Specter (D-PA) and Sen. Roberts (R-KS).

Why does this matter? This is a key issue and flaw in the current ASP system used to reimburse all Medicare Part B products (including injections and infusions) in the physician office and hospital outpatient settings. This will clarify appropriate reporting which will make reimbursement consistent and accurate across products. This is a key issues for physicians and hospitals.

House may have reached a deal on health reform

It was a very busy day in Washington as health reform discussions continued on the House side following reports yesterday that the Senate may have reached bipartisan consensus. Specifically bipartisan House leaders, the White House and four Blue Dogs on the Energy and Commerce Committee reportedly have reached a deal today on a health care overhaul. News of the consensus was announced as breaking news during a health care town hall meeting President Obama was leading in Raleigh, NC today.

Details that were announced include:

• Costs will be cut by $100 billion (no specific detail was released but estimates are that the bill would have to be under $1 trillion dollars)
• Public option not mandatory
• Increase exemptions for small businesses
• Prevent the public insurance option from basing reimbursement on Medicare rates.
• House floor vote would be delayed until at least September or mid-October

The group has been huddling for days to try to reach a deal on the package in advance of the House recess. Clearly this week's activity is a strong signal that some form of health care reform is likely to move forward this year.

Senate Plan Might Not Include Controversial "Public Option"

Breaking news from Washington DC includes reports that the Senate Finance Committee is close to reaching a bipartisan compromise on health reform that would not include the controversial "public" health plan option or an employer mandate. This is critical in that it may signal consensus developing to create a bipartisan health reform bill that at least initially excludes the most debated aspects of health reform. Clearly it is too early too tell whether we would see any specific language before the Senate recess, but it does appear that progress is being made on the Senate side.

What does this mean? Well it certainly is a sign that more moderate health care reform could prevail this year despite the much more dramatic reforms being debated by the House. For patients and the health care industry in general this would allow some of the benefits of expanding access to health insurance while leveraging the existing private payer markets.

House and Senate Health Reform Efforts Appear to be Slowing

It now appears that neither the House or Senate will vote on health reform legislation until after the August congressional recess. The good news is this will allow time for review of current draft proposals and time to consider options for additional cost savings. What does this mean for health care reform? In reality this is back to the original schedule most anticipated with potential votes on health reform coming in the Fall. Given the pressures on the economy and concerns about how to pay for health care reform this should allow more options to identify cost savings to fund expanded coverage.

House Energy and Commerce Committee Chair Henry Waxman (D-CA) suspended his committee's markup of the House bill earlier this week and has not scheduled its continuation. The House begins its recess Jul 31st.

Senate Finance Committee Chair Max Baucus (D-MT) said this week he hopes to move legislation out of the committee before the recess, but the process for doing so seems all but impossible. The Senate recess is set to begin August 7th.

While the legislative process may be slowing, some form of health care reform does indeed seem very likely to pass this year even if reforms are more incremental. In a prime time press conference and a town hall meeting in Ohio this week, Obama indicated he was undeterred by Congress' failure to meet his August deadline for reform legislation, and insists reform will happen this year.

House Tri-Committee Reform Bill --- What would this version of health reform mean for patients?

This week the House committees continue their mark-ups of the healthcare overhaul bill, called the America's Affordable Health Choices Act , introduced last week. The mark-up process is critical as there are many provisions still being debated for inclusion. For example, the House bill released last week does not yet include a biosimilars provision but one is expected to be added during the mark-up process.

So, how would this version of health reform impact patient access?

· Near-universal access to health care (expected to cover 97% of all Americans) is the signature piece of this bill

· Includes an individual coverage mandate and an employer coverage mandate

· Creates a new Health Insurance Exchange for families and small employers to identify and select health insurance from a range of options; the exchange would include a government-run plan option in addition to private payer options which has been one of the most debated concerns

· Creates a defined “essential benefits package” that includes coverage of many preventative services and creates the minimum coverage for all plans in addition to creating a cap on out-of-pocket costs

· Subsidies to individuals and families are limited and some do not begin immediately

· Medicare eligibles that have selected Medicare Advantage (instead of traditional Medicare) might see a change in plan offerings in the future as the government reduces payer incentives for these plans.

· The bill includes some changes to Medicare Part D that would reduce patient copays during the “donut hole”

· The bill also includes some technical changes to Medicare such as correcting a flaw in physician reimbursement

Of course one of the biggest areas of concern for this bill is how to fund universal coverage and this bill includes a mix of cost-cutting initiatives along with new revenues including a tax surcharge for households over $350,000.

Health Reform Cost Pressures Grows -- New Focus on drafts before August recess

The health care reform debate is facing new cost related concerns on both sides of the Capitol. Based on progress last, the House might have a draft of health reform legislation today. This comes as pressures grows based on concerns expressed by Blue Dogs (the fiscally conservative Democratic coalition) in a letter to Speaker Nancy Pelosi. Last week the Speaker herself called for more focus on cost savings in a public announcement as well as meetings with the committees leading House efforts.

The three committee chairman that are working this are Energy and Commerce’s Henry A. Waxman, D-Calif., Way and Means’ Charles B. Rangel, D-N.Y., and Education and Labor’s George Miller. Pelosi has pledged that the House won’t leave for the August recess without passing a health care overhaul bill, but clearly significant challenges remain on the House side. The Senate side faces even greater challenges in moving a bill forward before the August 7th recess. Key issues of contention remain a potential public plan option and proposals to pay for health reform that include taxing health benefits. Like the House side there are new calls to consider less costly health reform efforts. The next few weeks may end up determining the scope of health reform legislation considered this year.