Senate CBO Score on Health Reform Expected on Tuesday

Based on reports from the Senate Finance Committee Meeting today, the much anticipated score for Senate health reform legislation is now expected on Tuesday. The score is expected to be acceptable and in the 900 billion range.

The 72 hour notice would start on Tuesday and we assume the bill would be released to the public shortly thereafter. The vote to invoke cloture could then be as early as Friday. We expect members will review the bill first and then public release later this week.

With House Health Reform Passed, Will Senate be able to finish this year?

Last Saturday, November 7, the House passed its healthcare reform bill HR 3962, the Affordable Health Care for America Act, by a narrow margin of 220-215. Now as we look to next week -- will the Senate be able to build consensus to be able to pass their own bill before the end of the year? The House now holds an upper hand but many still believe that the Senate will in the end develop legislation most likely to build final consensus.

Some key highlights of the House Bill are provided below:

Public Option

• HHS would establish a public health insurance option as one of the available insurance plans in a national Health Insurance Exchange
• HHS would negotiate payment rates for health care items and services, including prescription drugs. Payment rates could not be lower, in the aggregate, than rates under Medicare

Medicare Part D

• The coverage gap (or Part D donut hole) would be phased out by 2019
• While the coverage gap exists, drug manufacturers would be required, as a condition of drug coverage under Part D, to pay a rebate equal to 50% of the negotiated price of the drug. The amount of the rebate would count toward the enrollee's TrOOP.
• Manufacturers would be required to enter into a separate agreement providing for payment to Medicare of rebates on Part D drugs dispensed to full-benefit dual eligibles
  HHS would have explicit authority to negotiate with drug manufacturers the prices, including discounts and rebates, that PDPs may be charged for drugs.

Medicaid Reimbursement and Rebates

• The FUL formula enacted in the DRA (but not yet implemented) would be replaced with a new formula. The new formula --130% of the weighted average of monthly AMPs of the drugs - would replace the DRA-enacted formula of 250% of the lowest AMP among the multiple source drugs
• The minimum rebate for innovator drugs would be increased from the current 15.1% to 23.1% of AMP. The current rebate for non-innovator drugs would remain unchanged at 11% of AMP.
• Medicaid rebates would be imposed on covered outpatient drugs dispensed to enrollees of HMOs, including Medicaid MCOs, unless the drug is subject to discounts under the 340B discount program

340B Drug Discount Program

• The program would be expanded to several additional covered entities, including, among others: free-standing cancer hospitals and children's hospitals that are excluded from Medicare's PPS and that meet disproportionate share requirements; critical access hospitals; community mental health clinics; Medicare-dependant small rural hospitals; sole community hospitals; and rural referral centers. The new covered entities would not be eligible for 340B pricing if they obtain covered outpatient drugs through a GPO. The final bill does not extend the 340B discounts to drugs purchased for inpatient use, a provision that was included in an earlier version of the bill

Biosimilars Pathway

• The bill creates a new pathway for the approval of applications for biological products shown to be biosimilar or interchangeable with a licensed reference product, including provisions to resolve patent disputes. The bill provides for up to 12.5 years of exclusivity (initial 12-year exclusivity period that may be extended by 6 months of pediatric exclusivity).

Excise Tax on Non-Retail Sales of Medical Devices

• A new excise tax equal to 2.5 % of the wholesale price would be imposed on medical device manufacturers for medical devices sold for use in the U.S.

Comparative Effectiveness Research

• A new Center for Comparative Effectiveness Research (CER) would be established within HHS to conduct, support and synthesize CER on health care items, services, and systems, including pharmaceuticals and medical devices.
• The Center would have access to data from any federal agency to conduct its research. An independent CER Commission would be established to recommend priorities, review research conducted by the Center and recommend methods of disseminating results.
• The Center would not be permitted to mandate coverage, reimbursement or other policies for any public or private payer, and its research findings could not be considered mandates for payment, coverage or treatment.
  

Senate leaders say health reform legislation possible next week

Today, Senate Majority Leader Harry Reid (D-NV) said he expects to bring legislation to overhaul the U.S. health-care system up for debate on the Senate side next week. Despite pressure and criticism, Senator Reid said today that he believes the Senate can pass the measure by the end of the year.

In order to get the 60 votes he needs Reid will have to bridge differences on whether reforms should include a public option, employer mandate and significant differences in how to fund coverage for the uninsured. In addition, federal funding for abortion has also entered in as a new, potentially disruptive issue for health reform.

Democrats control 60 votes in the Senate, just enough to pass legislation if they stick together. Currently, Senator Reid is waiting for Congressional Budget Office (CBO) cost estimates before unveiling his health-care bill and pushing to begin debate perhaps as early as next week.

What's next for Health Reform and Senate Following landmark House vote Saturday Night?

Most insiders have projected that the more moderate Senate would ultimately lead the way for final legislation on health care reform. However now with the Senate's landmark vote this weekend with a health reform bill that includes a public option the next steps on the Senate side are not clear. Pressure is mounting for the Senate to complete a vote before the Christmas deadline but the Senate side have not embraced the public health insurance option that Senate Majority leader Harry Reid has seemed to suddenly be supporting despite the fact that he does not have 60 votes needed for health reform including a true public option.

The Senate debate over health care now seems to have come to a dead stop, raising the possibility the Senate won’t even begin floor debate until after Thanksgiving. Timing is not the only issue as Reid must find a way to bridge the divide in the Democratic party between liberals pushing for a public option and moderates who have resisted the most ambitious version of that plan.

According to an article published in Politico, in a private meeting last week with Finance Committee Chairman Senator Max Baucus (D-MT) and moderate Democrats aired a long list of concerns about the House bill compared to the Senate Finance Committee approach including: the $1.2 trillion price tag on the House bill, its reliance on a “millionaires tax” to fund the overhaul and the lack of common ground between the House and Senate on other taxes, among other issues.

The House vote now puts more pressure on the Senate to bend which could make a more moderate, bipartisan approach to health reform a greater challenge.

Potential House Vote on Health Reform Saturday; But are the votes there?

House Speaker Nancy Pelosi (D-CA) announced today that she will have enough votes to pass Democratic health care legislation by Saturday and their are rumors of a potential Saturday vote. However many DC insiders are seeing the statement as confirming that she does not yet have the 218 votes needed to pass the $1 trillion dollar bill. Moderates including Democratic Blue Dogs still have concerns with fundamental components of the bill. Over the next 24 hours moderates and Blue Dogs will likely determine if Democrats have the votes they need but at this point there are significant gaps.

Today, AARP and AMA announced support for the House health reform legislation. However dramatic concerns remain regarding components of the bill beyond the public option such as the Medicare Part D drug price negotiation. Many key aspects of the House health reform plan were cut in the final version and there is concern that health reform needs to address long overdue issues such as Medicare Part B reimbursement and physician reimbursement cuts which have significant patient access implications.

Democrats file House Reform Bill; Friday vote possible but not likely

House Health Reform Update:

Late Tuesday night, the House Rules Committee posted the Manager's amendment of the proposed healthcare reform legislation. Based on House Democrats' agreement with Republican leaders to post final healthcare bills online for a minimum of 72 hours before a vote is called, the earliest a vote could be taken would be Friday night, but a vote could easily be delayed beyond that.

A delay seems likely as the amendment came on an Election Day which saw Democrats lose some key governors' races in the country, potentially creating new pressure for more moderate or bipartisan approach to health reform.

Republicans have also proposed a substitute amendment that focuses mainly on health insurance reforms but does include language to allow a pathway for biosimilars.

CMS Finalizes Controversial 2010 Medicare Physician Fee Schedule

The Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2010 Medicare's Physician Fee Schedule (MPFS) final rule last week. The final rule with comment period includes a negative 21.2 percent reduction in 2010 Medicare physician payments, which is slightly less than the 21.5 percent cut in the proposed rule released July 1. The cuts, resulting from the Sustainable Growth Rate (SGR) payment update formula, will take place unless Congress passes legislation to reverse them. At this point we expect Congress will implement a temporary fix again this year although there has been hope of a permanent fix.

The SGR issue is only part of the concern with this final rule as the there are other significant policy changes in the rule which seems particularly harsh on oncology and cardiology as well as services with high levels of work from non-physicians. Some drug administration codes (including chemotherapy) will see reimbursement cut over 20% even after the SGR issue is fixed. The increases in reimbursement appear limited to office visit codes.

Key points:

• Finalizes the policy to remove physician-administered drugs from the definition of physician services for purposes of computing the physician update formula
• Moves forward with updating practice expenses using a new survey, the Physician Practice Information Survey (PPIS), over a 4-year transition period. CMS will continue to use the specialty supplemental survey data for determining practice expenses for medical oncology
• Finalizes the proposal to stop making payment for consultation codes other than the G codes that are used to bill for telehealth consultations
• Adopts in part the proposal to increase the equipment utilization percentage used for setting practice expense (PE) for expensive equipment valued at more than $1 million from 50 percent to 90 percent.

The display copy of the final rule can be accessed here . The final rule with comment will be published in the November 25, 2009 Federal Register. While provisions of this final rule are expected to go into effect January 2010, CMS will accept comments on designated provisions of the final rule with comment period until December 29, 2009. The new payment rates and policies will apply to services furnished to Medicare beneficiaries on or after January 1, 2010.

Our preliminary analysis of the MPFS final rule identified several additional provisions of importance to physician offices:

• Implements a conversion factor of $28.4061 based on the statutory SGR formula, a reduction from the CY 2009 conversion factor of $36.0666
• Implements work, practice and malpractice relative value unit reductions that will redistribute payments under the fee schedule. As a result of these changes, specialists' service codes, including drug administration codes, among others will experience significant cuts while primary care services, including visit codes, will experience increases.
• Finalizes several of the proposed changes to the Competitive Acquisition Program (CAP), such as instituting a quarterly payment update instead of an annual update, narrowing the CAP drug list, and limiting the geographic area to the 48 contiguous states (as a temporary solution). The rule does not indicate timelines for the return of the CAP.
• Finalizes the proposal, per MIPPA, to create new benefit categories for cardiac and pulmonary rehabilitation services and for chronic kidney disease education
• Finalizes the proposal to increase by 1.0% the current composite rate for End Stage Renal Disease (ESRD) services to $135.15 and continues the drug add-on payment amount of $20.33 per treatment for services furnished on or after January 1, 2010
• Continues the threshold percentage of 5% for the Widely Available Market Price (WAMP) and Average Manufacturer Price (AMP). The Office of the Inspector General (OIG) will continue to compare ASP to WAMP and AMP.
• Finalizes changes to the PQRI program, such as adding an additional 30 individual PQRI measures and six measures groups on which individual eligible professionals (EPs) may report; codifies MIPPA requirements that will enable group practices to qualify for a 2010 PQRI incentive payment based on a determination at the group practice level, rather than at the individual EP level; and adds an electronic health record (EHR)-based reporting mechanism which will allow EPs to count their submission of EHR-based measures toward their eligibility for a PQRI incentive payment.
• Finalizes proposed changes to the E-prescribing Incentive Program including simplifying the reporting requirements for the electronic prescribing measure. For 2010, the rule requires EPs to report an e-prescribing code only when a patient visit results in an electronic prescription being placed. In addition, the rule implements a MIPPA provision that enables group practices to qualify for a 2010 e-prescribing incentive payment based on a determination at the group practice level, rather than at the individual EP level.

As the healthcare reform debate unfolds, it is unclear the mechanism and scope of the approach Congress will take to address the SGR-imposed cuts scheduled to take effect next year. However, Congress is expected to take action to either permanently address this revolving issue, or at a minimum, make another temporary fix to avoid significant cuts in Medicare physician reimbursement in 2010.