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.