Senator Baucus Releases Draft Health Reform Legislation

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

Key highlights include the following:

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

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