House and Senate both Pass a 1-year "Doc Fix" to Avoid Reimbursement Cuts

Breaking news today. The House has just passed the 1-year correction to the Sustainable Growth Rate (SGR) issues that threaten to reduce Medicare reimbursement to physicians by 25% starting on January 1st. The President is expected to sign the measure into law by tomorrow. This is welcome news as it will avoid the type of drama we experienced in 2010 with fee cuts being threatened several times during the year which created a messy patchwork of temporary corrections.

This provision would reverse that reduction and extend current Medicare payment rates through December 31, 2011. The estimated cost of the provision is $14.9 billion over ten years. Please note this is a 12-month fix so this issue has not yet been permanently addressed and given the high price tag to "avoid a pay cut" it remains an issue that is very difficult to explain to Mainstreet USA but has gone on for far too many years (and now across two different administrations). We can only hope that Congress will do what's right and create a permanent fix next year well in advance of the December 31st 2011 deadline.

President signs 1-month SGR Fix -- Congress must work to avoid a Jan 1 Medicare Reimbursement Cut

Some good news and some work to be done. This week, President Obama signed a 31-day Medicare physician payment extension that will temporarily postpone a 23% reduction in the payment rate. The Senate passed the one-month payment extension on November 18, and the House passed the measure on November 29. The temporary patch extends the current Medicare payment rate until December 30, and, as such, postpones the 23% reduction called for by the sustainable growth rate (SGR) formula that was scheduled to take effect December 1st.

However more work remains for this Congress before they can recess. Without further congressional intervention, the payment cut will grow to more than 25% on January 1.
Senate Finance Committee leaders this week continued the effort they started prior to the Thanksgiving recess to pursue legislation to affect a year-long patch to prevent the Medicare payment cut scheduled to go into effect January 1. The current projected cost of a 12-month fix that many expect to be included in a Medicare “extenders package” favored by Senate Finance Committee Chair Max Baucus (D-MT) is nearly $20 billion. As yet, funding offsets to pay for a 12-month patch and any extenders that many be included in future legislation have not been revealed. Both parties appear to be working to try to address this issue for 2011 during this lame duck Congress rather than returning home to their districts with a reimbursement reduction starting on January 1st.

It is important that Congress act on this issue now and avoid a potential issue or gap in reimbursement in January that could impact Medicare beneficiary access to care and would certainly jeopardize the financial stability of some physician clinics.

Senate Passes 31-Day Medicare Physician Patch; House Action Needed After Thanksgiving

Before the Thanksgiving break, the Senate passed a measure that would create a 31-day payment "patch" to the Medicare sustainable growth rate (SGR) formula and temporarily stave off the 23% cut to physicians scheduled to take effect December 1. The legislation, called the Physician Payment and Therapy Relief Act of 2010, would continue the existing 2.2% update (expiring November 30, 2010) for an additional month through December 31, 2010, and would fully offset the cost.

The one-month physician payment update comes with a price tag of $1 billion over 10 years. The Senate's proposal would offset the cost of the patch by modifying the multiple payment procedure reduction (MPPR) finalized in the calendar year (CY) 2011 Medicare Physician Fee Schedule Final Rule by applying a 20% reduction, rather than the 25% reduction included in the final rule, to the practice-expense component for the second and subsequent outpatient physical therapy services furnished in the office setting.

The month-long patch was announced as part of a two-part deal agreed to yesterday by Senate Finance Committee leaders who will pursue a payment fix through 2011 after they win approval of the patch through 2010. The Senate's proposed fix follows lobbying by the Obama administration and physician and advocacy groups to enact a 13-month payment patch.

The House, already adjourned for the Thanksgiving recess, will take up the measure when it reconvenes, which would then prevent the December 1st reimbursement cut physicians will otherwise face. However, this 31-day fix leaves Congress with a great deal of work remaining to prevent the additional cuts that would otherwise go into effect after January 1st.

Will Medicare Part B and Part D come together?

A new CMS study released last week has revived discussions about consolidation of the Medicare Parts B and D benefits. Many of the these studies were recommended back in 2004 as part of MMA and indeed they would offer some cost savings to the Medicare program. However, there are also dramatic differences in the coverage and copayments associated with these benefits.

According to a new CMS report, consolidating benefits for three drug cohorts (anticancer, pumped insulin, and nebulizer inhalants) covered by Medicare Part B and Part D under Part D could save Medicare nearly $150 million annually, while consolidating three different drug cohorts (vaccine, injectable insulin, and metered-dose inhalers) under Medicare Part B could increase Medicare spending by $52 million annually. Medicare is considering combining payment and coverage for certain drugs under either the Part B program or the Part D program partially because of the administrative complexity of the B versus D determination process for pharmacies and medical providers.

The report, "Estimating the Effects of Consolidating Drugs under Part D or Part B, " found that while consolidation under Medicare Part D could save Medicare money, it would impact Medicare beneficiaries adversely. Because Part D has "less generous coverage rules," switching the Medicare coverage of drugs from Part B to Part D would cost beneficiaries roughly $267 in added out-of-pocket expenses. But for many specialty products the increase in patient out of pockets is dramatically higher given most Medicare beneficiaries have Medigap (or Medicare Supplemental Insurance) that covers Part B out of pocket costs for such services.

Kaiser Survey Shows Dramatic Growth in Pharmacy Copayments

The Kaiser Family Foundation and the Health Research & Educational Trust (HRET) released the 2010 Employer Health Benefits Survey this month and while the "headline" showed average premiums increasing only 3% -- the real news is that families are seeing significant increases in out-of-pocket costs including deductibles, copayments and tiered copays that esclate the cost share for more costly drugs and services,

Since 2005, workers’ contributions to premiums have gone up 47 percent, while overall premiums rose 27 percent, wages increased 18 percent, and inflation rose 12 percent. Many employers are also raising the annual deductibles workers must pay before their health plans begin to share most health care costs. A total of 27 percent of covered workers now face annual deductibles of at least $1,000, up from 22 percent in 2009.

Of particular note, one in 8 employers now have 4 tiers for drug benefit copayments a trend which has doubled in just 2 years. Such tiers often leave families with overwhelming copayments for chronic and/or high cost biologicals.

The nation’s recession contributed to the shift in burden to workers. In response to the economic downturn, 30 percent of employers say they reduced the scope of health benefits or increased cost sharing, and 23 percent report increasing the amount employees pay for coverage, the survey finds. A summary of the study can be found at http://ehbs.kff.org/pdf/2010/8086.pdf

Employers likely to Change Plan Design and Benefits for 2011

A new Mercer survey shows that many employers will need to change their plan design and/or contributions for 2011 and beyond to an extent that will cause the plans to forfeit "grandfathered" status. Given the need to impose cost savings - or else absorb an unpalatable level of health benefit cost increases - only half (53%) of surveyed employers indicated they would retain grandfathered status for their plans.

Healthcare reform included a proviso that plans would not have to implement many of the cost-sharing and coverage mandates - provided the plans only imposed minimal cost-sharing requirements on members. For example, a plan cannot increase deductibles or out-of-pocket (OOP) limits by more than 15 percentage points beyond the increase in the medical inflation, nor can they raise copays by more than that amount, or $5, whichever is greater. Also, plans cannot increase employee coinsurance percentages. However, survey results demonstrated that, as a Mercer partner commented, "The rules for maintaining grandfathered status were tougher than many employers expected. As they start to get a clearer picture of projected cost for 2011, many are finding they need more flexibility to get their cost increases down to a level they can handle." Maintaining grandfathered status becomes more challenging over time so we expect this trend will grow.

What does this mean for the average American with employer-sponsored coverage including self funded plans? Well just under half of the plans will have their coverage, copays and contribution stay exactly the same for 2011 which is of itself remarkable. But for the rest, the trend will continue for higher premium and out of pocket costs where such increases are permitted under health reform. Health reform has brought more transparency and focus on these issues -- but the cost issue especially for working families remains.

Bill Providing Medicaid Assistance to States Advances

Legislation that includes $26 billion in aid and Medicaid support for cash-strapped state governments advanced yesterday in the Senate and then at the end of the day House Speaker Nancy Pelosi made a surprise announcement that she will call the House back into session next week to approve the legislation.

The legislation is generally supported since it directly helps cash-strapped states and includes some emergency type measures that will help to save key jobs for teachers, police officers and other government workers. The legislation also includes some health care related components. Specifically it provides an exclusion for Average Manufacturer Price (AMP) for inhalation, infusion and injectable drugs not generally dispenses through a retail community pharmacy. There is some concern about the specific wording of this component and how reimbursement would be impacted.
Also of note, the legislation does not include any further revisions or expansion to the 340b program which had been previously included.

CMS Extends Medicare Claims Processing Hold through June 17. Physicians may experience slight delay in claims payment.

CMS announced this morning that they will continue to hold claims pending congressional action this week to address the sustainable growth rate (SGR) issue that otherwise would create a 21% cut in Medicare claims payment for services starting on June 1st. This announcement does mean a potential delays in claims payment for physicians but based on guidance the worse case scenario would be a 3 day delay, if any.

The announcement from CMS to Congress on this issue included the following background and context: The Continuing Extension Act of 2010, enacted on April 15, 2010, extended the zero percent (0%) update to the 2010 Medicare Physician Fee Schedule (MPFS) through May 31, 2010. At this time, Congress is still debating the elimination of the negative update that took effect June 1, 2010. CMS is hopeful that Congressional action will be taken within the next several days to avert the negative update. To avoid disruption in the delivery of health care services to beneficiaries and payment of claims for physicians, non-physician practitioners, and other providers paid under the MPFS, CMS had instructed its contractors on May 27th to hold claims for services paid under the MPFS for the first 10 business days of June (i.e., through June 14, 2010). This hold only affects MPFS claims with dates of service of June 1, 2010, and later. Given the possibility of Congressional action in the very near future, CMS is now directing its contractors to continue holding June 1 and later claims through Thursday, June 17, lifting the hold on Friday, June 18. This action will facilitate accurate claims processing at the outset and minimize the need for claims reprocessing if Congressional action changes the negative update. It also should minimize the provider and beneficiary burdens and costs associated with reprocessing claims. CMS indicated that they understand that the delayed processing of Medicare claims may present cash flow problems for some Medicare providers. However, it is expected that the delay, if any, beyond the normal processing period will be only a few days.

Health care providers and advocacy groups are urging Congress to take action on this issue quickly and hopeful provide for a longer term fix to this issue.

Congress has not acted to address 21.3% Medicare Physician Fee cut on June 1 -- CMS announces they will hold claims

CMS announces they will temporarily hold claims starting June 1st in case Congress fails to act.

Currently, neither the House of Representatives and the Senate have approved legislation to stop the pending 21.3 percent cut to physician Medicare payments, which will take effect unless final legislation is signed into law by June 1. Despite a proposal earlier this week calling for modest updates through the end of 2014, legislators ultimately scaled back many areas of the bill, including the Medicare physician payment provision, to reduce the overall cost of the bill. However, House members continued to object to the revised cost of the bill, making it unclear when the House would hold a vote.

It is not clear that Congress will be able to pass even another short temporary fix before June 1. To address this possibility, earlier today the Centers for Medicare & Medicaid Services (CMS) released the following statement:

The Continuing Extension Act of 2010, enacted on April 15, 2010, extended the zero percent (0%) update to the 2010 Medicare Physician Fee Schedule (MPFS) through May 31, 2010. The Centers for Medicare & Medicaid Services (CMS) believes Congress is working to avert the negative update scheduled to take effect June 1, 2010. To avoid disruption in the delivery of health care services to beneficiaries and payment of claims for physicians, non-physician practitioners, and other providers of services paid under the MPFS, CMS has instructed its contractors to hold claims containing services paid under the MPFS (including anesthesia services) for the first 10 business days of June. This hold will only affect MPFS claims with dates of service June 1, 2010, and later.

This hold should have minimum impact on provider cash flow because, under the current law, clean electronic claims are not paid any sooner than 14 calendar days (29 for paper claims) after the date of receipt. Be on the alert for more information about the 2010 Medicare Physician Fee Schedule Update.

Will the Physician "Doc Fix" issue get addressed before June 1st Deadline?

Potential progress this week on the Medicare Physician Reimbursement "Doc Fix" issue which would create a 21% cut for physicians unless the temporary fix that expires on June 1st is addressed. The issue is being included in a Tax Extenders Bill that includes a wide range of provisions.

Yesterday, House Ways and Means Committee Chairman Sander Levin (D-MI) and Senate Finance Committee Chair Max Baucus (D-MT) circulated a $220 billion tax extenders bill (H.R. 4213) that includes a Medicare physician payment adjustment, an extension of unemployment benefits and COBRA subsidies, an a number of other health care provisions. Details are limited but the proposal includes a plan to block scheduled cuts in Medicare reimbursement for physician services through 2013. According to the bill summary and reports from policy insiders, the proposal would provide a 1.3% rate increase starting June 1 for the remainder of 2010, and an additional 1% increase in 2011. There would be no reductions in 2012 and 2013, and there would be an allowance for payment increases for primary care and preventive care services.

As an offset to the cost of the physician pay "fix" - currently being assessed by the Congressional Budget Office (CBO) - the proposal would change Medicare's "72-hour" rule, disallowing hospitals from submitting separate claims for inpatient and outpatient care provided within 3 days of a hospital admission, a proposal the hospital industry is lobbying against heavily, as it represents further cuts to hospitals on top of the hit the industry will take under the new reform law.

The proposal also includes an expansion of the 340B drug discount program to inpatient drugs for use by patients who do not have prescription drug coverage. However, the language related to expansion of 340B to include inpatients appears to provide new clarity and restrictions regarding the use of 340B drug discounts to only eligible patients within eligible entities. This is a critical issue since current 340B drug discount programs in the outpatient setting appear to be used for all patients by eligible facilities. The details of this provision will be critical to watch should this legislation move forward.

House Democrats have been working since last year toward at least a 5-year solution to the ongoing cuts created by the SGR, but the Senate consistently raised cost concerns and does not support a longer term fix that is not paid for. Physician advocates, while desperate for some form of relief from the imposing 21% cut, continue to push for a permanent fix to the perennial payment problem created by the SGR. About the current proposal, physicians fear that the current problems will only be exacerbated in 2014 when payment rates would revert to the current formula.

In other relief provisions, the bill would extend by 6 months increased federal payments for Medicaid programs (initiated in the American Recovery and Reinvestment Act of 2009, ARRA). Additionally, the bill would also extend, through the end of the year, the 65% COBRA subsidy, also effectuated by the ARRA.

The tax extenders bill is scheduled to be taken up by both chambers next week with some urgency as the current delay in cuts expires May 31st.

Health Reform Creates new Challenges for Physician Issues with Medicare Policy

The healthcare reform law included a little-publicized provision calling for the permanent dissolution of the Practicing Physicians Advisory Council (PPAC), a CMS physician advisory panel. And, although they have not yet publicly announced the advisory panel's discontinuation, HHS informed PPAC members of the Council's fate last month, indicating the June meeting will not take place.Providers are concerned that their venues for advancing concerns and providing input to Medicare regulations and policy are limited with the demise of the PPAC.
The Medicare Payment Advisory Commission (MedPAC) and the new Independent Payment Advisory Board (IPAB) established by the new reform law have physician members, but both Commissions are primarily focused on cost cutting and are not substitutes for the PPAC.Conjecture about the dissolution attributes the Council's end to the powerful Ways and Means Committee Chair Peter Stark (D-CA), who has very publicly and repeatedly focused on patient concerns over those of providers with increasing vigor over the last several years. Regardless of the motivation and source for dissolving the Council, physicians are concerned that practicing physicians have lost a platform to access regulators and vet their concerns.

Medicare "Doc Fix" -- Groundhog Day Continues

The temporary fix to avert the 21% cut to Medicare physician payments expires on June 1 -- once again creating a dramatic threat to physician reimbursement.

The long-debated issue of fixing the flawed sustainable growth rate (SGR) payment update formula has now gotten more complex since the Congressional Budget Office (CBO) released an updated estimate on merely freezing the current Medicare payment levels. According to the updated CBO, a long-term payment freeze would cost $276 billion over 10 years, a figure that is more than 30% more than its estimate to adopt a similar measure last fall. The scoring increase is attributable to the improved economic outlook and an increase in the estimate in the volume of Medicare physician services over the next decade. This issue does not make any sense to the average American -- how can it cost $276 billion to keep physician reimbursement flat?

So now physicians (for the third time this year) are facing the 21% "cliff" if Congress does not again act to avert the cuts. Twice so far this year, Congress has extended the 2009 Medicare payment rates as it continues to debate a longer-term fix to the problematic update formula.

Democrats are working to pass a measure that would avert the cuts for up to 5 years, estimated to cost $89 billion. Members of the both the Senate and the House support such a fix but, so far, have not been able to agree on the "pay for" for such a fix which has created the issue.

This issue remains critical to the viability of many physician practices, and there are growing reports of practice and clinic closures due, in part, to this protracted debate along with persisting inadequacies in Part B drug reimbursement.

We need to get this SGR issue fixed -- hopefully for more than a short term fix so we can move onto other issues critical to patient access and reimbursement. We continue to work to urge Congress to exclude prompt pay terms from ASP in order to have accurate and consistent reimbursement of life saving treatments in the physician office and hospital outpatient setting as an urgent next step.

Medicare Part D: New confusion on how the 50% brand discount will work

This past week CMS released a memo to Part D plan sponsors with draft guidance on how the 50-percent discount provided by drug manufacturers for Part D beneficiaries in the coverage gap will be operationalized. The guidance includes a few surprises, and departs somewhat from how the program was envisioned by congressional members who were part of the "$80 billion deal" negotiated with PhRMA last summer. From a patient access perspective --- many seniors already have very high expectations regarding the "closing of the donut hole" but the reality is this will take some time given the cost.

Some of the highlights from the draft guidance include the following:

• A Part D drug will only be covered under Part D if the manufacturer has a signed agreement with CMS to provide the discount on coverage gap claims for all of its applicable drugs and remains compliant with the terms of that agreement
• The Part D sponsor must provide the discounts for applicable drugs in the coverage gap at the point-of-sale (POS) (such as the retail pharmacy or specialty pharmacy).
• CMS will coordinate the collection of discount payments from manufacturers and payment to Part D sponsors that provided the discount to beneficiaries
• A CMS contractor will invoice each manufacturer quarterly on the behalf of Part D sponsors
  Manufacturers will be required to pay the invoiced amounts to Part D sponsors directly; manufacturers must pay the entire invoiced amount within 15 days (including any amount in dispute)
• Given the timing of the discount agreements and plan bids, CMS must allow coverage in 2011 of Part D drugs irrespective of manufacturer discount agreements
• In a departure from what was outlined in the new health reform law, CMS will not be using a third-party administrator to oversee the discount program due to HIPAA concerns.

Perhaps a bigger surprise, being described as a "process glitch", is the fact that the agency does not plan to require all branded manufacturers to offer the discount in 2011. According to the guidance, "CMS must allow coverage in 2011 of Part D drugs irrespective of manufacturer discount agreements," which means that some of the brand drugs on plan formularies may not be discounted in the coverage gap, unless all manufacturers agree to the discounts by the 2010 deadline.

In press remarks following the release of the guidance, a CMS official explained that the formularies for the Part D plan sponsors had to be submitted by last month, and CMS has not yet issued a notice of "model manufacturer agreement", by the time the formularies were due for the 2011 plan year. As such, CMS indicated it won't know until closer to the end of the year whether all manufacturers will sign the discount agreements for next year.

According to the new law, manufacturers are required to have model agreements signed by July 1, 2010, for fiscal year 2011. In popular press this week, manufacturer representatives indicate they anticipate offering the discounts next year.

CMS has requested comments to the draft guidance by May 14.

Current SGR "Doc FIx" issue expires May 31st

Congress has passed a temporary patch for the Medicare Sustainable Growth Rate (SGR) issue to prevent a 21% cut in Medicare physician reimbursement, however, the current patch expires May 31, 2010 so the work on this issue must continue.

The House Ways and Means Committee is continuing its work on a revised version of the tax extenders bill passed by the House and Senate H.R. 4213, which included a SGR patch until September 30, 2010. The Chairman of the Committee, Sander Levin (D-MI) has stated his intent to move this legislation prior to Memorial Day. The challenge, however, is finding an acceptable pay-for to off-set the cost of extending the tax cuts included in the bill even though it is yet again only another temporary fix. Further, it is concerning to think we could have to address this issue again just before the November elections. I am hoping we see the length of the temporary fix extended at least though the elections or through 2011. Physician groups such as the AMA are pushing for a permanent fix but given the cost of this issue a longer-term temporary fix may be a better option at this point.

On a related issue, Senate Democrats released their 2011 budget proposal last week, which continues to exempt the a fix of the Medicare Physician payment system (SGR) from Statutory-Pay-As-You-Go Act. The language specifically exempts the cost of a 5 year zero percent update from having to be paid for. This does not mean that the Congress must pass a 5 year zero percent freeze as they could do a shorter extension with a higher update just so long as it did not exceed the cost estimated by CBO for a 5 year zero percent update.

Will this issue get addressed in a more sustainable way? We all understand the current budget pressures but to put physicians and Medicare beneficiaries in the middle of these issues is not appropriate.

Temporary "DocFix" is Approved through May 31st

Good news -- but its another short term fix.
Tonight, Congress has passed and President Obama has signed a Medicare physician payment bill that extends the 2009 physician payment rate until May 31, thus reinstating the payment rate that was in place on March 31. This will allow CMS to rescind a 21.2 percent reduction that went into effect on April 1 because of the sustainable growth rate, or SGR, formula.

CMS held payment of claims from April 1-15, awaiting passage of the payment legislation. The Senate, however, was unable to pass the Medicare payment bill before the 21.2 percent cut started to take effect.

CMS will instruct its contractors to retroactively reprocess any claims that were paid at the lower rate. Claims with dates of service prior to April 1, 2010, are not affected and will continue to be processed under normal procedures.

Good news for tonight but a longer term fix is needed!

Frustration Surges: Senate fails to approve temporary "doc fix" to prevent 21.3% fee cut -- but expected to fix it this week

Tonight the Senate failed to approve an amended version of H.R. 4851 which would continue the current Medicare physician reimbursement payment freeze until June 1.

Based on the previously announced schedule by CMS, Medicare contractors will begin processing impacted claims on Thursday, April 15th to ensure timely claims payment but at the new reduced fee level. These claims will have to be retroactively corrected once the Senate finally addresses this issue. The Senate is expected to return to consideration of this amended version of H.R. 4851 tomorrow. However, since the version of the extension legislation the Senate is considering is not identical to the version passed by the House on March 17, the House must approve this Senate passed version before sending it to the president for his signature.

Earlier today, the House Rules Committee approved a rule allowing for swift consideration of this amended version of H.R. 4851. The House is expected to act on this legislation later this week.

The Centers for Medicare and Medicaid Services (CMS) previously indicated that if legislation was not enacted by midnight April 14, Medicare contractors would begin processing the held April 1 claims. Once final legislation regarding the Medicare payment freeze is passed, we anticipate CMS issuing an official statement and details related to correcting these reduced levels of reimbursement.

Clearly this is frustrating news from Washington DC tonight -- especially since Senators believe this can be addressed this week. We all know this type of claims "rework" is costly and the gap in reimbursement is unacceptable so please call your Senator and urge action now.

Health Reform Could Increase Medigap Cost-Sharing for Seniors

Patient advocates are expressing new concerns that the language in the health reform bill will hit Medigap plans with higher cost-sharing requirements and would likely lead to increased copays starting in 2015 for the two most popular types of Medigap plans, Plans C and F.

Some health care experts worry the provisions, targeted for their savings and the hope that extra out-of-pocket costs will reduce unnecessary medical services, would unfairly hurt patients newly enrolling in the program.

Currently, Medigap policies pay the full 20 percent of cost-sharing for physician care and other outpatient Part B services, but the new law indicates that patients have to pay some of the cost sharing in order to reduce unnecessary medical care. Since there is no cap on the Medicare Part B copayment, many seniors prefer Medigap plans C and F as they cover all of those costs. Such coverage is critical for chronically ill patients and cancer patients.

Clearly, this will be one several key issues that impact patient copayment exposure and related access to care.

CMS will hold physician services claims for 10 business Days

Breaking news from CMS.

CMS has instructed its contractors to hold claims containing services paid under the MPFS (including anesthesia services) for the first 10 business days of April.

• This hold will only affect claims with dates of service April 1, 2010, and forward.
• In addition, the hold should have minimum impact on provider cash flow because, under the current law, clean electronic claims are not paid any sooner than 14 calendar days (29 for paper claims) after the date of receipt

Senate fails to pass 30-day "doc fix" to prevent 21.3% Medicare payment cut for physicians effective April 1st

The Senate has adjourned for its two-week spring recess without approving H.R. 4851, a short-term measure that would have extended the freeze on Medicare’s current physician payment rates through April 30.

Several Senate Republicans led by Tom Coburn of Oklahoma objected to classifying the bill, which also included extensions of unemployment benefits and COBRA insurance, as emergency spending. The House of Representatives passed the bill on March 17. By law, the 21.3 percent cut to Medicare physician payments will take effect April 1.

However, in similar situations in the past, the Centers for Medicare & Medicaid Services (CMS) has instructed carriers to temporarily hold claims. While CMS has not made this announcement yet, we exect that CMS will hold claims for the first 2 weeks of April.

The Senate returns April 12 and has scheduled a cloture vote on the 30-day extension bill for 5:30 p.m. that evening. Physician offices should contact their Senators and urge them to permanently address this issue by repealing the sustainable growth rate (SGR) formula. This is frustrating and disappointing but as long as Congress acts on April 12th there will hopefully not be an impact for physicians due to the normal lag in claims processing by CMS.

President signs Health Reform into Law; But Many Issues Remain

The President signed health care legislation into law today. Today's ceremonies followed a very busy weekend in Washington DC with the House approving late Sunday night the Senate Health Reform bill and Reconciliation Language.

The House took two separate votes on the reform legislation. First, the House passed - by a vote of 219 to 212 - HR 3590, the Patient Protection and Affordable Care Act, the bill approved by the Senate last December. The House then passed HR 4872, the Health Care and Education Affordability Reconciliation Act of 2010, by a vote of 220 to 211. This legislation modifies the Senate bill with a number of "fixes" negotiated over the last two months by the House and Senate. As expected, not a single House Republican voted in favor of either measure.

The contentious, year long health reform debate is not finished, however, as H.R. 4872 goes to the Senate, where only a simple majority is needed to approve the bill under the reconciliation process. The Senate will consider the modification bill under streamlined procedures that avoid time-consuming cloture motions to begin and end debate on the bill. Senate Republicans are expected to offer numerous amendments and raise multiple points of order to the legislation. If the bill is changed in any way prior to Senate approval, it must return to the House for an additional vote before the President can sign it. A timeline on the Senate debate of the reconciliation measure has not yet been officially released but is expected to proceed quickly given the upcoming Spring recess which is supposed to start at the end of the week.

Even with passage of the most historic health reform legislation since the enactment of Medicare, policy insiders anticipated a reinvigorated battle over the future of Medicare as the Senate considers the reconciliation language. Also expected on the horizon are appropriations funding battles for the provisions of the bill of discretionary spending provisions and threats of court cases in several states over requiring individuals to purchase health insurance.

The Senate this week will also consider a new short-term extension bill (HR 4851) to extend the delay in Medicare physician rate cuts until April 30. The current extension expires on March 30. The House approved the measure on Wednesday. The Senate approved a longer-term extension (HR 4213) earlier this month which is pending action in the House. This is one of several critical issues yet to be addressed. Next up...the real work begins on the implementation of health reform.

Health Reform -- Too Close to Call

Speculation is growing that Democrats do not yet have the votes necessary to pass a healthcare reform bill. At the same time, House Speaker Pelosi has signaled she will work to push through health reform well before the coming spring recess.

The House Democratic Caucus was reportedly told by their leadership this morning that there would be a single, closed health reform vote within the next week, to include the reconciliation provisions (amendments to the Senate health reform bill and a student aid package) and the Senate passed reform bill. The Senate bill vote is wrapped into the single vote, so when members vote for or against the reconciliation package they will also be voting for or against the Senate passed health reform bill. Once passed, the Senate bill would go to the President for signing, and the reconciliation provisions would go to the Senate where they must pass the provisions unchanged. The Senate Parliamentarian ruled earlier this week that the President must sign Congress' original health care reform bill before the Senate can act on a companion reconciliation package. Some speculate this new twist could create new challenges for health reform legislation.

The White House has been pressing for a vote next week, but lingering questions this week cast doubt on whether the House would vote on the reform provisions before Congress adjourns for two weeks on March 26th.

Senate Passes A 6-Month Fix to SGR Issues

Senate passes another temporary fix to SGR and Medicare Pay extenders This week the Senate passed another temporary Medicare physician payment patch by a vote of 62-36. The bill prevents a cut to Medicare physician reimbursement and instead holds payment levels flat until October 1, 2010. The legislation extends several programs related to unemployment and COBRA benefits, as well as other tax provisions and federal programs. It also includes language to delay DME accreditation requirements for pharmacies until January 2011 and exempts pharmacies where DME is less than 5% of sales.

The following lists some of the key health extenders contained in the American Workers, State, and Business Relief Act of 2010, as passed by the Senate:

• Provides a nine month extension of the 65% COBRA premium assistance (through December 31, 2010) and extends the enhanced Medicaid FMAP increase from the American Recovery and Reinvestment Act through 2010.
• Provides a six month extension of the 0% update to the 2010 Medicare physician fee schedule (through September 30, 2010).
• The 1.0 floor for the work geographic practice cost index (GPCI) used to help calculate the Medicare physician fee schedule update would remain in effect through 2010 which is important for rural physicians.
• Extends the Medicare exceptions process for outpatient therapy services through December 31, 2010.
• Extends for one year (to January 1, 2011) the date by which certain pharmacies must be accredited as durable medical equipment (DME) suppliers and allows HHS to establish alternative quality standards and accreditation requirements for pharmacies.
• Extends the Medicare mental health services 5% add-on payment through December 31, 2010.

CMS will temporarily hold claims while we wait for Congress to address SGR Issue and health reform update

The Senate was unable to pass legislation to block the scheduled 21% Medicare cut to physicians scheduled for Monday, March 1st. Earlier in the week, Senate Majority Leader Harry Reid (D-NV) attempted, unsuccessfully, to procure unanimous consent (UC) from the Senate on a bill that would extend current Medicare rates for 30 days among other healthcare provisions. The 30-day extension plan was part of a two-step approach that involved two legislative measures: a smaller measure, which included a 30-day extension in SGR-imposed cuts and unemployment benefits, as well as COBRA insurance programs; and a larger, more comprehensive measure that would delay the cuts through the end of the year along with a more comprehensive set of health-related and tax "extenders." Reid's plan was blocked by Senator Jim Bunning (R-KY), over objections that the healthcare-related "extenders" in the measure were not offset, or paid for. The House passed the 30-day extension bill on February 24th.

Senate Democrats will, reportedly, try again next week by taking up a longer-term (year long) extension package, which is expected to include most of what Senate Democrats were unable to pass in the 30-day extenders package. The bill is not expected to clear the floor until the latter part of next week at the earliest.

CMS instructed Medicare contractors to hold claims for the first 10 days of March pending further developments on the payment cuts. Prior to the announcement, there were a number of anecdotal reports that physicians had planned to hold claims, reschedule Medicare patients or stop seeing Medicare patients altogether until the payments are restored. Under current regulations, physicians can hold claims up to 14 days before submission. What all this means is that we have a 2 week buffer before claim payment is reduced and physician practices begin to feel this devastating cut in payment. We need to all work to keep the pressure on all members of Congress to address this now.

While debate continues following the "health summit" last week, we can not let these core issues such as SGR and other Medicare extenders impact patient access to care.
The white house summit ended with the President making it clear that he intends to move forward with reform legislation with or without the Republicans within the next 4 to 6 weeks. The process to do so will either be a scaled-down plan ("skinny plan") or Democrats could use the process of reconciliation that would likely be modeled on the President's proposed outline which is based on some modifications to the Senate bill.

Key components of that proposal include the following:

• Insurance Exchange: Sets up 50 insurance marketplaces administered by the states, in which small businesses and people without employer coverage could buy insurance that meets new federal standards; establishes a new federal authority that would address insurance premium hikes.
• Individual Mandate: Individuals must purchase insurance or pay a penalty that would be the greater of $695 or 2.5% of income by 2016.
• Employer Responsibility: Does not include an employer mandate, but requires companies with 50 or more employees to help defray the cost if taxpayers are paying for their worker's insurance. Also penalizes companies with 50 or more employees that don't provide coverage, but exempts the first 30 workers when calculating the tax. Companies that don't offer insurance would be charged $2,000 annually per employee.
• Medicaid Expansion: Expands Medicaid to cover everyone earning less than 133% of the FPL ($29,327) for a family of 4. Increases the federal share of covering new eligible beneficiaries, and proposes to simplify several eligibility rules for the current program. The proposal also seeks a middle path between the House and Senate bill's subsidies for low-income Americans.
• Closes the Medicare Part B Doughnut Hole: Closes the doughnut hole by 2020 by increasing the amount of money provided for rebates to beneficiaries and by reducing co-insurance payments.
• Pathway for Follow-on Biologics: The proposal includes very little detail, but includes establishing "a new pathway to create generic versions of biological products." The proposal does not include data exclusivity terms.
• Financing: Combination of Medicare cuts, new taxes and increased industry fees. The proposal includes a tax on high-cost insurance (or "Cadillac" health plans), but pushes it up to $27,500 for family plans and $10,200 for individual plans, up from $23,000 and $8,500, respectively, compared to the Senate bill. It extends the 2.9 percent Medicare payroll tax into unearned income for couples earning more than $250,000. It also Increases the pharmaceutical industry fees to $33 billion (up from the $23 billion in the Senate bill), and builds on Medicare cuts included in the House and Senate bills.

Rumors have begun to emerge that a scaled-down measure is being prepared by Democratic lawmakers should they lack the votes needed to pass reform legislation through the reconciliation process.

Health Reform -- "Side car" Reconciliation if Bipartisan Effort Fails? Doc Fix issue still looms...

White House and Democratic congressional leaders were, reportedly, imminently close to completing a detailed health care proposal designed to win passage without Republican support if President Barack Obama's summit next week fails to produce bipartisan compromises.

During a press conference yesterday, HHS Secretary Kathleen Sebelius said Democratic negotiators are reconciling final differences in House and Senate health bills that passed last year. The White House plans to post the proposals online early next week (perhaps on Monday February 22), ahead of the February 25 summit announced earlier this month.

In other news reports filed by the Associated Press this week, another White House official, who spoke anonymously, made comments suggesting the White House and Congress' Democratic leaders could fall back to the reconciliation process to enact comprehensive health reform if Republican leaders don't support compromises that could draw enough lawmakers from both parties to create a bipartisan majority. According to those reports, the goal of this week's negotiations is to develop a reconciled measure that Senate Democrats can pass, under rules barring Republican filibusters, unless Republicans offer acceptable changes at next week's summit.


The House does not have enough votes to pass the Senate-passed reform bill, HR 3590, without changes to the measure's financing proposals. Under the parliamentary procedure known as reconciliation, the House would pass the Senate bill and the Senate would immediately amend the measure through a "side car" reconciliation bill. The contents of such a proposal have been tightly held and there is no clarity but it is expected to modify the Senate Bill just enough to garner the necessary votes on the House side.

While broader reform continues to swirl -- we have a March 1 deadline to prevent a dramatic 21% cut in Medicare Physician Reimbursement due to SGR (known as the "Doc Fix") that still has not been addressed. This issue will remain central to next week's activities.

Medicare "Doc Fix" issue Looms as Senator Reid Narrows the Bipartisan Jobs Bill

In a surprise announcement this afternoon, Senator Reid has narrowed the proposed Baucus & Grassley bipartisan jobs bill to focus it on jobs related issues. The problem is that some of the components added were critical "extenders" to Medicare that are needed to address critical issues including the 21% Medicare pay cut for physicians on March 1st. This issue must be addressed now.

Link to article announcing the change in course http://su.pr/2Zf3zj

Congress and Health Reform Update: Will Jobs Bill Help Address Urgent Issues Such as Doc Fix?

Congress is reportedly still weighing health reform options, including reconciliation based on reports this week. While health care reform legislation has clearly stalled since State Senator Brown (R-MA) won the special U.S. Senate race in Massachusetts last month, congressional leaders are, reportedly, continuing to ponder options for passing comprehensive reform legislation. House leaders said this week they will take their cues from the Senate before determining their strategy for advancing comprehensive reform legislation.

After a budget hearing this week, Senate Finance Committee Chair Max Baucus (D-MT) reportedly told Congressional Quarterly that the Senate is continuing to consider moving health care reform through the reconciliation process. Under that scenario, the Senate reform bill would be approved by the House and simultaneously amended via "sidecar reconciliation bill" introduced in the Senate. Congressional leaders in both chambers, since the special MA election, continue to say reconciliation is the best chance for passing a comprehensive reform bill. This approach has the support of the White House, but it does not have broad support from members of Congress.

Given the current stalemate on moving comprehensive reform legislation, House and Senate leaders are preparing to move forward with stand-alone votes for smaller-scale reform provisions. The House is preparing to advance a repeal of anti-trust exemption for health insurers, medical loss ratio rules and banning health plan rescissions. The Senate is considering a six-month extension of increased federal funding for Medicaid (FMAP) as part of its jobs creation bill. The White House continues to push for enactment of comprehensive healthcare reform this year despite the President's economic agenda having taken first priority. The President's FY 2011 Budget Proposal, released February 1, assumes $150 billion deficit reduction resulting from passage of health care reform.

So what's next?? Indeed it is not clear what, when or how health reform might move forward. We all recognize that there are issues that must be addressed quickly including the Medicare SGR Physician Reimbursement issue (or "Doc Fix"). Rumors today are that Congress might address this issue (for at least a year or perhaps as a 5-year fix) as part of a jobs-related bill.

State of the Union Address: 5 Minutes on Health Care

In tonight's much anticipated State of the Union Address, the focus was on jobs and the economy. However, the President asked Congress to continue to focus on health care and he linked the debate on health reform as central to our economic challenges. The President urged Congress to "finish the job" on health care as more Americans lose health insurance each day. Specific health reform initiatives were not addressed and in fact the President spent only about 5 minutes on health reform in total.

So where does this leave the health reform debate? Its not clear but we all know there are health care related issues that still must be addressed this year such as critical Medicare and physician reimbursement issues. The fun here in Washington continues.

Health Reform Debate May Take a Break but Medicare Physician Reimbursement Issue Must be Fixed Now

While health care reform is in limbo, we do need some form of health care legislation to pass in order to prevent a looming cut to Medicare reimbursement for physicians at the end of February. We understand that Senate leadership and the chairmen of the Finance and Budget committees are working to try to include a fix to the Medicare physician payment formula as part of legislation being considered to increase the federal debt ceiling.

While details have not been confirmed, but the deal being discussed reportedly includes a 5-year exemption from the pay-as-you-go rules for a physician pay fix. The plan also includes creation of a deficit reduction commission, which would make recommendations to Congress on how to proceed with reducing the federal debt. The commission's recommendations would be put to congressional vote for approval. There is disagreement within Senate leadership on the creation and scope of the commission, and some leaders support creation of such a commission via executive order instead of legislation. The physician pay fix could have a modest increase to Medicare fees but all of the scenarios are very modest at this point. Without congressional action, a 21.2 percent cut to the fee schedule is scheduled to kick in at the end of February making this a critical health care issue that must be addressed regardless of other health care legislation.

Massachussetts GOP Win creates uncertainty for health reform

Since the GOP win in the Massachusetts Senate race Tuesday night, Healthcare reform is again back at the top of the news headlines and it remains unclear what the next step for health reform legislation will be. Here are some of the key headlines and insights from Washington insiders

• On ABC's Nightline last night, President Obama indicated that he did not want the Senate to push through legislation without Senator Brown. He also signaled that he might be willing to scale back his proposed health care overhaul to a version that could attract bipartisan support which is welcome news.
• Today many major industry players announced their continued support for some form of healthcare overall including PhRMA and even some larger insurers.
• We understand that Pelosi has indicated that she does not think the House could pass the Senate's health care bill and we believe democrats are now talking about paring down the healthcare reform package to so that they could get some kind of bill--albeit a smaller one--through Congress. Most party moderates believe some type of bipartisan support is needed.
• Despite the headlines, health reform can still pass this year. Although Democrats won't have 60 votes in the Senate any more, they will have 59, which is a wider majority than presidents like Ronald Reagan or George W. Bush needed to win significant legislative victories. The fun in Washington continues and health reform remains a central issue!

Hopefully, this game changer will create an opportunity to correct some serious gaps in the proposed health reforms with a more bipartisan approach. Regardless, there are several significant issues that must be addressed soon including the looming Medicare physician (SGR) 20% cut in reimbursement. Stay tuned....

President pushes to health reform negotiations

This week has included several unusual day-long negotiating sessions on health reform that included President Barack Obama and top Democratic congressional leaders. Progress appears to have been made on several issues and on Thursday the White House announced that a tentative agreement has been reached with union leaders to tax high-cost insurance plans. If the agreement holds, this would remove one of the major stumbling blocks in the way of a final compromise on comprehensive health care legislation.

The breakthrough on the insurance tax marked a victory for the White House, which has long sought a tax on high-cost plans as a way of curbing the rise in health care expenditures. Organized labor had opposed it, arguing the impact would fall heavily on workers whose bargaining contracts gave them more robust health care coverage and therefore limits on the amount of money that could be claimed as a tax deduction could increase income taxes for employees that opt for such plans.

Many key issues are still being debated including whether to establish a single national health insurance exchange, as supported by the House, or dozens of state exchanges, which has been proposed by the Senate. We are also closely following a proposed "Medicare Commission" board which could significantly reduce Medicare reimbursement process without a normal rule making process.

White House officials have told Democrats that they want an agreement as soon as possible, maybe in the next week to 10 days. It will then take time to receive a cost estimate from Congressional Budget Office before votes can be considered. If the goal remains to complete the legislation before the State of the Union, then they would need to be close to key compromises. The date of the State if the Union address has not yet been finalized but today we are hearing it could be February 9th.

Next week we expect to see how key Senators such as Nelson and Lieberman react to potential discussions as their support remains critical for health reform to pass.

Congress gets back to work but final pieces of health reform legislation not yet clear

The House of Representatives will resume legislative business on Tuesday, January 12, thus beginning the Second Session of the 111th Congress. The Senate will resume legislative business a week later on January 19.

Since both chambers of Congress have passed health care reform legislation, Democratic leadership is currently working to combine the two bills and reach consensus on the remaining contentious topics. Although Democrats are hoping to pass legislation before the State of the Union, this deadline is not set in stone and could be subject to further delay.
　
Last week, Democratic leadership from both the House and Senate met with President Obama and members of his Administration to discuss health care reform strategy and substance. Private discussions will continue next week and are likely to heat up as Congress returns to town. Before a final bill is ready for passage, Democratic leadership must reach agreement on several issues. It is currently projected that the Senate version of health reform will carry the key issues (such as no public option) but many other issues remain unclear.
　
President Obama has begun taking a more active role in the House/Senate negotiations. This week, Obama voiced support for taxing so called "Cadillac Health Care plans." He believes that this provision is key to curbing the rising cost of health care. As Congressional negotiations move forward, President Obama will continue to increase his involvement.
　
Earlier this week, the President met with Congressional Democratic leadership to discuss the future of health care reform. President Obama continues to urge Members to finish work on health care reform and send legislation to his desk as soon as possible.
　　

Happy New Year -- Health Reform Fun Continues!

Today, reports from Democratic leaders indicate that the House and Senate will not set up a formal conference process to work through the significant differences in the health reform bills that have passed in the Senate versus the House. This informal process of negotiations (often referred to as ping pong) has already begun between Senate Majority Leader Reid and House Speaker Pelosi. The informal process is the only way that Democrats can bypass procedural hurdles that would challenge the feasibility of passage of a final health reform bill. Senators are not in town this week, but House leaders and key committee chairmen plan to meet Tuesday to discuss melding the bills.

• The Senate bill that passed early in the morning on December 24th does not include a public option like the House bill which will bring this issue back into debate.
• The bills also differ in how they are funded. Reports are that the House may be prepared to accept a Cadillac tax as long as the threshold for premiums considered high cost is raised so union plans are exempt.
• The House bill imposes a 5.4 percent surtax on individuals earning at least $500,000 and families earning at least $1 million. The Senate bill imposes a 40 percent excise
  tax on the value of premiums that exceed $8,500 for individuals and
  $23,000 for families.
• There are also differences in how to fill the gap in Medicare Part D prescription drug coverage, known as the doughnut hole.
• Also important is a Senate-created commission meant to make
  cost-cutting decisions in Medicare.

The White House would like to see a bill on the president's desk by the State of the Union address which will likely be late January or early February which is a challenging timetable for such negotiations.

Thus the debate and discourse on these details continue....is it Groundhog Day yet?