Accountable Care Organizations (ACOs) -- A model that is emerging for the long-term but hard to implement in the short-run

CMS Announces New Options for ACOs
Last week, CMS announced several new options for implementing accountable care organizations (ACOs). These new options provide incentives for providers to develop or join ACOs earlier than the original start date (January 1, 2012) and to receive upfront bonus payments. ACOs were established as part of health care reform to incentivize the development of networks of providers to collaborate and coordinate services to deliver higher-quality care to Medicare beneficiaries. By delivering care that meets certain quality measurements, ACO-affiliated providers can receive CMS-issued bonus payments.

The new options to facilitate ACO development that were proposed are:
1. Pioneer ACO Model -- CMMI is now accepting applications for this new ACO model, which will provide a faster path for existing ACOs and integrated-care organizations than under the Medicare Shared Savings Program start date of January 1, 2012. Pioneer ACOs will be able to collaborate with private payers and achieve greater savings by transferring to a population-based model in the third performance year (given satisfactory performance during the first 2 years of operation). CMS will hold these organizations financially liable for delivered care and will publicly report their performance.
2. Advance Payment ACO Initiative -- CMMI proposes to allow ACOs to receive a portion of shared savings (ie, bonus payments) upfront before CMS begins contracting with ACOs in 2012. These upfront payments will help providers make necessary infrastructure and staffing investments that are the backbone of successful ACOs. CMS plans to recoup these advanced payments through ACOs' shared savings once they become operational. Comments for this initiative should be submitted to advpayACO@cms.hhs.gov by June 17, 2011.
3. Accelerated Development Learning Sessions -- CMS will offer educational sessions to inform providers about the necessary steps to becoming a successful ACO. These free sessions will provide information about actions providers can undertake to improve delivery of care and to achieve better-coordinated care. CMS will offer 4 sessions in 2011, each with a focused curriculum on ACO development. To attend the June Accelerated Development Learning Session in person, individuals may register at https://acoregister.rti.org.

Many healthcare stakeholders believe CMS released these new options in response to the strong criticism facing the ACO proposed rule. Provider reaction to these new options is still unclear and many providers remained fundamentally concerned about the ability of these models to positively impact the quality and outcome of care.

So what does an ACO mean to a physician, nurse or pharmacist in your community? At this point its not clear but many analysts are projecting these new care models will develop more locally through the expansion of existing integrated delivery systems. There is hope that eventually these models will allow very different models for care including expanded roles of physician assistants, nurse practitioners and pharmacists.

So as a patient, will I know if I am in an ACO? The answer is a "maybe". In fact we know that in Massachusetts, the ACO model has grown but patients often do not know they are part of an ACO. Its often "not obvious" that you are being served by an ACO which in many ways is a positive sign that care is not being inappropriately restricted -- but questions remain on how ACOs impact care for disease states like cancer.

Like many parts of health care reform implementation -- we are just beginning to see how this might work and what it might mean for patients.

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.

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.

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.

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.

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.

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.

Will the Senate be able to drive toward bipartisan health reform?

Challenges continue to grow for some form of bipartisan health reform but the debate over health care appears far from over and may last until December.

Today, reports from Capitol Hill indicate virtually no Republican support for Senate Finance Chair Baucus (D-MT) and the health reform mark he released yesterday. Olympia Snowe (R-ME) is the only potential Republican name that may consider supporting the proposed Finance bill. Republicans may not even offer any of the other amendments to the proposed Senate Finance mark based on reports today. What does that mean? Basically, the best chance for bipartisan health reform legislation might start with a fresh, blank piece of paper.

The key areas of consensus remain focused on insurance reforms but virtually all other issues are being debated due to the cost issues with such reforms.

Is Bipartisan Reform still possible?

Today, Senate Finance Chairman Max Baucus (D-MT) said there is “high probability” that he will release his health care reform bill Tuesday and that he hopes to simultaneously announce that it will be a bipartisan product. Clearly Baucus is working to bring the "gang of six" together and their has been focus this week to compromise together on the most controversial issues such as having more of a private co-op or exchange than a true "public option". After the Chairman's mark is released there will still be opportunities to modify the bill through the amendment process which does leave open the door for more bipartisan support. Other key issues being discussed include language intended to make sure that illegal immigrants can not participate in such coverage and also new funding to reduce medical malpractice lawsuits.
Stay tuned -- it will be a busy week for health care!

Baucus Healthcare Refom: New Details Released Today

Below is the framework of Baucus' healthcare reform approach, apparently released to the Senate Finance Committee "gang of 6" for consideration today. The official documents have not been released but new details (summarized below) have been widely shared across Washington experts today. It does includes some key imminent issues such as addressing the 2010 Medicare physician reimbursement cut (referred to as sustainable growth rate). It also includes some new "surprise" fees on health insurers, device industry and others.

The reported price tag comes in a $900 billion over 10 years and there is no "true" public plan option although the bill includes a number of insurance market reforms, including creation of state health insurance exchanges to help facilitate access to coverage for individual and non-group markets. The bill includes an individual mandate for coverage, beginning 2013, but would not require employers to provide coverage for employees (although employers with more than 50 employees must "pay" if they don't "play" per framework below).

The framework also creates/makes improvements to value-based purchasing programs for hospitals, physicians, home health agencies and SNFs, among other providers, and would facilitate payment bundling approaches through pilot programs. It also includes payment changes for some DMEPOS (e.g., oxygen, power wheelchairs, etc.). The framework also includes increased emphasis on industry transparency (e.g., Rx drug sampling reporting requirements) and fraud and abuse, including imposition of new fees on manufacturers.

Key highlights being reported today include the following proposals (please note the actual bill language has not been released):

• Part D Drug Discount Program. Beginning in 2010, in order to have their drugs covered under Medicare, manufacturers must 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. In January 2011, prior to the expansion, states would be given the option to cover non-elderly non-pregnant adults through a state plan amendment (SPA) at their current match rate. Effective January 1,2014, the proposal would expand Medicaid income eligibility levels nationwide.
• Prescription Drug Coverage, Medicaid Rebates and AMP. Prescription drugs would become a mandatory Medicaid benefit. The status of drugs used to promote smoking cessation, barbiturates, and benzodiazepines would be changed from "excludable" to "non-excludable." Medicaid prescription drug rebates would be applied to Medicaid managed care organizations. Similarly, the rebates would be applied to new formulations of existing drugs, with an exception for orphan drugs. The rebate amounts would be increased, with the minimum rebate percentage for single-source and innovator multiple source drugs going from 15.1%to 23.1%and from 1 1%to 13% for generic drugs. For clotting factors and drugs approved by the FDA for pediatric use only, the rebate would be increased from 15.1%to 17.1%.The federal upper limit (FUL) would be changed to no less than 175% of the weighted average (determined on the basis of utilization) of the most recently reported monthly average manufacturer price (AMP).
• Hospital Value-Based Purchasing.The proposal would establish a value-based purchasing program for hospitals starting in 201 1. Under this program, a percentage of hospital payment would be tied to hospital performance on quality measures related to common and high-cost conditions, such as cardiac, surgical and pneumonia care. Quality measures included in the program (and in all other quality programs in this section) will be developed and chosen in cooperation with external stakeholders.
• Physician Value-Based Purchasing.This provision would make improvements to the Physician Quality Reporting Initiative (PQRI) program, including requiring all eligible health professionals to participate by 201 1, establishing payment incentives for physicians to appropriately order high-cost imaging services, expanding the Medicare physician feedback program, and penalizing physicians who utilize significantly more resources than their peers.
• CMS Innovation Center. This provision would establish an Innovation Center at CMS that would have the authority to test new provider payment models. Payment reforms that are shown to improve quality and reduce costs could be expanded throughout the Medicare program. The Innovation Center's funding would be set at $10 billion.
• 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.
• Medicare Sustainable Growth Rate (SGR).The scheduled 21% reduction in Medicare physician payment rates in 2010 would be replaced with a 0.5% increase.
• Ensuring More Appropriate Physician Payment Rates.This provision would establish a panel comprised of health care providers, experts, and stakeholders to identify physicians' services that are overvalued in the Medicare physician fee schedule. In consultation with the expert panel, the Secretary would be required to adjust payments for those services that have increased at an unusually high annual rate without evidence supporting the clinical appropriateness of such growth.
• Prescription Drug Sample Transparency. Drug manufacturers and authorized drug distributors would be required to report to the Secretary information already collected pursuant to the Federal Food, Drug and Cosmetic Act. Specifically, manufacturers and distributors would be required to report the type and amount of drug samples requested by and distributed to practitioners, along with the practitioners' names, addresses, professional designations and signatures. The reported information would not be made publicly available.
• Pharmaceutical Manufacturing Companies Fee.Under this proposal, an annual fee of $2.3 billion would be imposed on the pharmaceutical manufacturing sector beginning in 2010. The fee would be allocated by market share.
• Medical Device Manufacturers Fee.Under this proposal, an annual fee of $4billion would be imposed on the medical devices manufacturing sector beginning in 201 0. The fee would be allocated by market share.
• Health Insurance Provider Fee.The proposal would impose an annual fee of$6billion on the health insurance sector beginning in 201 0. The fee would be allocated by market share.
  Clinical Laboratories Fee.Under this proposal, an annual fee of $750 million would be imposed on clinical laboratories beginning in 2010. The fee would be allocated by market share, except for small businesses.

Senator Baucus pushes for bipartisan support of Senate Finance Health Reform Proposal

In today's Washington Post, Senate Finance Chairman Max Baucus is said to be urging his Republican colleagues to support the $900 billion health-care reform package they have helped to negotiate over the past two months -- creating a bipartisan proposal before President Obama's speech Wednesday night.

The Baucus plan, circulating among the Finance Committee's "Gang of Six" this weekend, sets forth provisions that have already gained the group's unofficial support but now there is pressure from other Republican colleagues to let the Democrats fight for a health reform bill on their own.

The Baucus plan creates bipartisan options for some of the most controversial aspects of health reform. Instead of a government insurance option, the Baucus proposal would create a network of non-profit cooperatives which is an alternative that Grassley, the lead Republican negotiator, has backed. The Baucus plan also creates new fees on "high cost plans" which may be controversial since many union households could be impacted.

At a cost of under $900 billion for 10 years, the finance bill would appears to be at least $100 billion less than other legislation on the table. Analysts indicate the plan is designed to "bend the cost curve" downward over time to make health-care more affordable for businesses, individuals and government, while reducing the federal deficit within 10 years.

In addition to the fee on high-cost plans, the proposal also would extract about $400 billion in cost-savings from Medicare, cuts that are stirring unease among both parties.

Under Baucus's plan, Medicaid would be expanded to cover all individuals -- except illegal immigrants -- who make up to 33 percent above the current federal poverty level. The plan would provide tax credits to help low and middle-income families purchase private insurance coverage, and would set up health insurance exchanges so small business workers and other individuals whose employers don't provide health coverage, could select from a menu of plans.


We expect to see more detail tomorrow from the Senate Finance team tomorrow in advance of the President's speech on Wednesday. The Senate Finance health plan proposal has been projected to be the best opportunity for bipartisan health reform legislation this year.

President Obama: How will his address impact progress on health reform?

President Obama announced this week that he will greet the return of Congress next week with an address to a joint session of Congress on Wednesday night (September 9th). It is expected that the President will provide more specifics on some focused reforms he would like to see related to health reform legislation.

What do we expect to hear from the President? The White House has been very focused that the goal of health reform must be to:

1. lower costs
2. create a secure and stable health care system
3. provide access to affordable health care for all Americans

It is unclear how the President will address the most divisive issue of a public plan option but one scenario gaining support is to propose a public plan option that is used only as a fallback approach should savings from a market-based system not reach certain levels over time. Besides the controversial public plan issue, are there other specific ideas or policies the President will mention or will he keep to the big picture?

Is there a middle ground on health reform?

Despite the rhetoric and media coverage, there are appears to be some aspects of health reform with bipartisan support. In fact both parties are now saying indeed something must be done related to the cost and access issues regarding health care.

Bipartisan consensus proposals include some of the major health insurance industry reforms such as preventing insurance companies from:

• denying coverage to people with preexisting injuries and illnesses
• cutting insurance coverage off when a policyholder gets sick
• imposing a lifetime cap on benefits

Another key issue with new support from both the Senate and the House would be to require insurance companies to offer dependent coverage to young people through their parents' insurance plan until they turn the age of 26.

This feels modest but as Congress prepares to return from recess next week lets hope they focus on finding some middle ground that we can all agree on.

Senator Kennedy and Impact on Health Reform?

This past week, with the death of Senator Edward Kennedy, Democrats lost not only a champion of healthcare reform, but also someone who was often able to work with Republicans for bipartisan reforms. Some are now focused on passing health reform in his memory while others argue that someone that was key to the potential for bipartisan reforms is now gone. While it may not change the outcome on health reform this fall, he does leave big shoes to fill.

Sen. Chris Dodd (D-CT) vowed to continue the fight for healthcare reform following the death of Senator Kennedy , but he could not say whether he intends to succeed Kennedy as chairman of the Senate health committee. Dodd, who chairs the Senate banking committee but spearheaded the health panel's five-week markup of health reform legislation, said he would take time to weigh his options and confer with Democratic leaders before making a decision.

The chairmanship of the Senate Health, Education, Labor and Pensions (HELP) Committee is one of many holes that Kennedy's death has left in the Senate. Dodd is now the panel's most senior Democrat, and could become its new chairman, if he is willing to give up the chairmanship of the Senate banking committee. If Dodd does not take the HELP position, the next senators in line would be Tom Harkin (IA) and Barbara Mikulski (MD). Harkin, like Dodd, would have to surrender his chairmanship of the Agriculture Committee in order to lead HELP.

HELP along with the Senate Finance Committee are the key committes for the Senate focused on health reform.

With Congress now in recess, what is the outlook for health reform?

With both the House and now the Senate going out on recess -- this is a perfect opportunity to assess the outlook for health reform. The Senate is the continues to have the best chance of moving forward with bipartisan health reform this year. In fact yesterday, President Obama met with the group of six Senators (being referred to as the Gang of Six) that are leading the charge on health care reform in the Senate which includes Senate Finance Chair Max Baucus (MT-D), Chuck Grassley (IA-R), Kent Conrad (ND-D), Jeff Bingaman (NM-D), Olympia Snowe (ME-R) and Mike Enzi (WY-R). The meeting did not resolve any key issues but the Senators are reported to have committed to continue negotiations over the recess with a goal of reaching some form of consensus by mid-September. This means that the earliest the Senate Finance would move to mark-up would be the week of September 14th. Key health reform issues that remain unresolved that are key to bipartisan support include:

• Public plan option and related details
• Independent MedPAC or expanded role for MedPAC as a rate setting authority
• Expansion of Medicaid and related budget impact for states
• Level of insurance subsidies for lower income families
• Mechanisms to fund health reform and other cuts or "pay fors"

Most experts are still projecting some form of health reform legislation will emerge this year but it is not likely until mid or late October based on the differences in bringing together the work from the various committees in both the Senate and House.

The House Energy & Commerce Committee staff will be working over the recess to identify the remaining amendments and determine which are noncontroversial and can be agreed upon by both sides to be made a part of the base bill to be marked up in September starting after the recess. Our understanding is that only the amendments submitted during the last mark-up will be considered and then those would be added as additional recommendations from the committee.

The House Democratic Leadership and the Chairman of the three Committees will then reconcile changes for a final bill for consideration on the House Floor potentially in early October. This means that both the House and Senate could finalize some form of health reform as early as late October.

Senate Plan Might Not Include Controversial "Public Option"

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

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

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

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

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