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.