MACPAC Releases Report on Medicaid Managed Care

The Medicaid and CHIP Payment and Access Commission (MACPAC) released its June 2011 Report to the Congress: The Evolution of Managed Care in Medicaid. The Commission’s report provides an overview of Medicaid managed care, including information on populations enrolled, plan arrangements, payment policy, access and quality, as well as program accountability, integrity, and data.

At Last – Long-awaited Health Reform Reconciliation Bill Released

Today House Democratic Leadership released the legislative text of the Reconciliation Act of 2010, sponsored by House Budget Chairman John Spratt.  The bill amends a number of provisions in the Senate-passed “Patient Protection and Affordable Care Act,” including:

  • Provides additional subsidies to improve the affordability of coverage for individuals with incomes up to 400 percent of the federal poverty level;
  • Imposes additional requirements for coverage of non-dependent children up to age 26;
  • Closes the Medicare Part D donut hole by 2020 by offering seniors an immediate $250 rebate and subsequently increasing discounts on brand-name drugs;
  • Strikes the controversial 100-percent federal Medicaid matching rate for Nebraska (known as the “Cornhusker kickback”);
  • Delays the annual cap on contributions to health flexible spending accounts (FSAs) by two years until 2013;
  • Delays the excise tax on high-cost health plans to 2018, increases the dollar thresholds and indexes them to inflation;
  • Delays the industry fee on sales of brand name pharmaceuticals by one year to 2011 but increases revenues raised by $4.8 billion;
  • Delays the medical device tax on manufacturers by two years until 2013 and switches the industry fee to an excise tax on the first sale for use of medical devices at 2.9 percent rate; and
  • Delays the health insurance industry fee by three years to 2014.

House Majority Leader Steny Hoyer announced that the House would convene at 1:00 pm on Sunday, but the final vote on the reconciliation bill would likely not begin until later in the day to comply with the Democratic Leaders’ promise to give Members 72 hours to review the final bill text.  The House is expected to approve the Senate-passed health reform bill using a “deem-and-pass” procedure that Republicans protest as unconstitutional.

Since the bill’s release, several House members have switched their previous ‘no’ vote to a ‘yes’ – including Reps. Bart Gordon (D-TN), Luis Gutierrez (D-IL), Betsy Markey (D-CO), and Mike Arcuri (D-NY).  Additionally, Rep. Dennis Kucinich (D-OH) announced yesterday that he will now vote in favor of the bill.

MACPAC Convenes Meeting Focused on Managed Care

In considering the Medicaid expansion beginning in 2014, states may seek to encourage Medicaid managed care plans to offer both Medicaid and health insurance exchange coverage, in order to prevent disruptions in coverage as individuals shift in and out of Medicaid eligibility based on changes in their income level.  On May 19, the Medicaid and CHIP Payment and Access Commission (MACPAC) convened to discuss managed care, which is among its highest priorities and will be the focus of the Commission’s June 2011 Report to Congress.  State Medicaid Directors in New York and Oklahoma discussed current managed care initiatives as well as identify challenges and opportunities for the future.  Both states have a long history of managed care and note that it will have a significant role in the future to ensure coverage while establishing the correct incentives for appropriate utilization of care.  The New York State Medicaid Director noted that the underlying question that remains to be answered is whether managed care controls costs over time.

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After a solemn week in the House of Representatives devoted to recognizing and remembering the victims of the Arizona shootings, the White House has instructed that Congress get back to work and on with its legislative business.  Therefore, Majority Leader Eric Cantor announced that the House will resume “thoughtful consideration” of the health care reform repeal bill this week.  Beginning Tuesday, seven hours of debate will be allowed on the bill with the final vote to occur on Wednesday.  The rules will also allow for one Democratic amendment by Rep. Jim Matheson (D-UT) that would provide for a permanent fix to Medicare’s sustainable growth rate formula, preventing dramatic cuts in physician reimbursements under Medicare.  Congressional Democrats were vocal in their opposition to the repeal bill, noting that it would eliminate important consumer protections, leave millions without insurance, and add to the deficit. Preliminary analysis by the Congressional Budget Office supported this position by determining that repealing the overhaul bill would cost $230 billion over ten years.  It is largely expected to pass due to the Republican majority, but will likely not gain any traction in the Senate.  On Thursday, House Republicans plan to bring up their bill instructing the committees to draft replacement legislation.  Committee organization is also expected to resume, and announcements on Democratic Members’ placement on Committees and subcommittees should be announced this week.

Analysis from the Institute of Medicine’s public meeting last week on what constitutes the definition of “essential benefits” is expected to be a hot topic.  The health reform law required that the IOM analyze and develop criteria for a definition of benefits that all plans sold through an insurance exchange will have to offer.  The IOM will likely publish a report of its findings in September.  However, the process is still in its early stage.  The Bureau of Labor and Statistics is required to find out what the typical employer-sponsored health plan covers, while the Department of Health and Human Services will ultimately determine the final definition.

Last week the Medicare Payment and Advisory Commission (MedPAC) finalized its recommendations for its upcoming March report to Congress.  Of note, the Commission voted to recommend to Congress that inpatient and outpatient Medicare hospital payments rise by 1 percent in fiscal 2012, that payment rates under the physician fee schedule should increase by one percent, and backed a first-ever co-pay for home health care services, despite concerns about the financial burden it might affect beneficiaries.  Chairman Glenn Hackbarth noted that there is ample evidence that the use of co-pays deter over-use of a service. Home health use has increased by 50 percent since 2001 and Medicare spent $19 billion on home health services in 2009. 

Finally, it is also important to note that the National Quality Forum (NQF) has opened a Call for Nominations for organizations and individual subject matter experts to serve on the advisory workgroups of the Measure Applications Partnership (MAP).  MAP will provide recommendations to the Department of Health and Human Services on selecting measures for public reporting and performance-based payment programs.

The multistakeholder workgroups will advise the MAP Coordinating Committee on quality issues and the use of measures to encourage improvement for specific care settings, care providers, and patient populations.  Although the workgroup structure will need to be flexible to respond to the needs of HHS, NQF anticipates the potential for as many as four advisory workgroups in the following areas: clinician, hospital, post-acute care/long-term care, and dual eligible beneficiaries. All nominations must be submitted by Monday, February 7, at 6:00 pm ET.

The Impact of Health Reform on Employers

After months of debate and considerable political maneuvering, President Barack Obama signed the Patient Protection and Affordable Care Act (H.R. 3590/P. L. 111-148) into law on March 23, 2010. On March 30, 2010, the President signed into law the Health Care and Education Reconciliation Act of 2010 (H.R. 4872/P. L. 111-152), which makes select changes to H.R. 3590.

Together, these laws are designed to expand health insurance coverage to 32 million Americans who are currently uninsured, while reining in rapidly-growing health care costs. Health care spending is the fastest growing line item in the federal budget. Health care premiums have doubled in the last decade and have been an increasing burden to employers and employees, as well as state and local governments. This memorandum details the impact of the newly-enacted health reform laws on employers.

Regulations Released Regarding Dependent Coverage of Children to Age 26

The IRS, Department of Treasury, Employee Benefits Security Administration, Department of Labor, and Department of Health and Human Services released interim final rules for group health plans and health insurance issuers relating to dependent coverage of children to age 26. 

The interim final rules are effective 60 days from the date of publication in the Federal Register (May 13, 2010).  Comments on the rules are due 90 days from the date of publication.

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Health Care Reform Regulations

This week, the Health Resources and Services Administration will publish notice to establish a rulemaking committee. The Patient Protection and Affordable Care Act requires the Administration to establish a methodology and criteria for designation of medically underserved populations and primary care health professions shortage areas.  The rulemaking committee will work to reach consensus among technical experts and stakeholders on an interim final rule on the methodology and criteria.

The interim final rules for group health plans and health insurance issuers related to dependent coverage of children to age 26 is currently under review at the Office of Management and Budget. The interim final rule is expected to be one of several forthcoming rules required under the Patient Protection and Affordable Care Act.

House Appropriations Chairman Announces Retirement

Last week, House Appropriations Committee Chairman Dave Obey announced his retirement.  He served as the Chairman of the full Committee and the Labor-Health and Human Services Subcommittee. Rep. Norm Dicks of Washington is expected to serve as Chairman of the full committee. Rep. Nita Lowey of New York, the second ranking Democrat on the Labor-HHS Subcommittee, or Rep. Rosa DeLauro of Connecticut, Chairwoman of the Agriculture Subcommittee, will likely serve as the Labor-HHS Subcommittee Chairwoman upon Chairman Obey’s retirement.

Medicare Physician Fee Fix 

Congress has three work weeks prior to adjourning for Memorial Day recess. With the physician fee fix set to expire on May 31, the House is posed to move an extenders bill that would include an extension of the Medicare physician fee fix. Majority Leader Steny Hoyer stated that the House would act within the next two weeks. If the cost of the extenders package is not offset, we expect that the Senate will not be able to move the legislation. In the midst of the financial reform debate, several Senators have been working on an extenders package, which would also prevent the drastic Medicare physician payment cuts from going into effect.

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National Commission on Fiscal Responsibility Convenes

Last week, the National Commission on Fiscal Responsibility convened its first meeting. The 18-member panel heard presentations from Ben Bernake, Chairman of the Federal Reserve, Peter Orszag, Director of the Office of Management and Budget, and Robert Reischauer and Rudolph Penner, both former directors of the OMB. The Commission is required to develop a plan by December 1 to reduce the deficit.

Dr. Orszag highlighted the Administration’s longer-term efforts to reduce the deficit, such as working with Congress to enact pay-go legislation and enacting health care reform legislation, which will reduce the deficit by $1 trillion during the next 20 years.

Mr. Reischauer advised the Commissioners to consider all categories of spending and any revenue options as they draft a proposal.  However, he stated that the health care reform law reduces Medicare spending significantly and that the CMS Chief Actuary has suggested that beneficiaries may have problems accessing medical services if the provider payment updates are implemented.

The Commission will next meet on May 26 on the Hill.

CMS Releases Guidance Documents on Medicare Part D Gap Discount Program

On Friday, the Centers for Medicare and Medicaid released guidance regarding the Medicare Part D coverage gap program established in the Patient Protection and Affordable Care Act and amended in the Health Care and Education Reconciliation Act of 2010.

Under the Medicare Coverage Gap Discount Program, manufacturers are required to provide a $250 drug rebate in 2010 for both brand name and biologics purchased during the coverage gap. For brand-name drugs and biologics purchased during the coverage gap beginning January 1, 2011, manufacturers are required to give a 50 percent discount to beneficiaries.

The guidance explains how CMS will account for the payments and discounts the manufacturers give to beneficiaries. The preliminary guidance also describes how Part D sponsors should determine applicable discounts for beneficiaries.

CMS is accepting comments on the preliminary guidance through May 14 and will issue final guidance after reviewing the public comments.