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Capital Thinking Podcast

House Passes Health care Reform Legislation

A historic 219-212 vote in the House of Representatives late last night sent the health care reform bill to the President’s desk for his signature. John Jonas, head of the health care policy group at Patton Boggs, discusses:

  • The mechanics of last night’s House passage
  • Challenges involved in Senate passage this week of the “sidecar” reconciliation package
  • The implementation challenges of the bill
  • Prospective next steps on more reform legislation, and
  • What last night means for the political capital of President Barack Obama and Congressional Democrats.

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Capital Thinking Podcast

Given recent resignations and a death, House Speaker Nancy Pelosi needs 217 votes to pass the Senate bill. The whip count in the House remains close.  Congressman Joseph Cao, the only Republican who voted in favor of the House health care reform legislation, is not expected to lend his support to passage of the Senate bill. Representative Bart Stupak and other anti-abortion Democrats, who authored the language in the House package to prohibit individuals from using federal subsidies to purchase plans in the exchange that cover elective abortions, have been vocal that they will not support the Senate package. Department of Health and Human Services Secretary Kathleen Sebelius has suggested that the White House may strike a deal with the Congressman to address his concerns in a separate bill in exchange for support on the Senate bill. Although President Obama may be ready to move health care reform forward without Republican support, he must ensure that Congressional Leaders can rally Democrats.

White House Press Secretary Robert Gibbs said that the President wants the House to pass the Senate bill before March 18.  House Energy and Commerce Committee Chairman Henry Waxman, however, suggested that Congress could finish health care reform within the next two months. House and Senate Leadership had hoped to send a reconciliation bill to the Congressional Budget Office to be scored.

Meanwhile, last week, the Senate turned to a jobs package and tax extenders legislation, both which contain short-term fixes or extensions of expiring Medicare provisions. The Senate passed and the President signed into law H.R. 4691, the “Temporary Extension Act of 2010.” The legislation includes an extension of the Medicare physician fee fix as well as an extension of the therapy caps exceptions process through March 31, 2010.

When the Senate convenes today, it will resume consideration of the tax extenders package. The legislation is expected to pass this week with the Baucus substitute amendment, which extends the physician fee fix through the end of the year. The substitute amendment also includes a number of Medicare extenders that were included in the Senate-passed “Patient Protection and Affordable Care Act.”

Representative Charlie Rangel took a temporary leave of absence as the Chairman of House Ways and Means Committee as the House Ethics Committee ruled that he broke ethics rules by accepting trips to the Caribbean. An investigation into claims of tax evasion and failure to report income from rental properties continue.  Michigan Congressman Sandy Levin will serve as Acting Chairman.

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Capital Thinking Podcast

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.

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Capital Thinking Podcast

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.

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As Congress returned from the August recess, lawmakers and stakeholders geared up for the first public meeting of the Budget Control Act’s Super Committee meeting on September 8.  In preparation for the Committee’s work, the House Ways and Means Committee Democrats released a list of potential health care specific cuts that the Super Committee could consider.  The compiled list was an accumulation of pay-fors that have been offered in various deficit reduction plans.  The list totals more than $500 billion over 10 years and staff confirmed the offsets have not been officially endorsed by Members.  The list included mostly Medicare focused cuts, such as accelerated home health rebasing ($3 billion) and a new home health copay ($40 billion), post acute provider market basket freeze ($14-28 billion), increased SNF cost-sharing ($21.3 billion), elimination of the rural health hospital add-on payment ($62 billion), GME cuts ($15 billion), new cost-sharing for clinical lab services ($24 billion), new Part D rebate for dual eligible and LIS beneficiaries ($120 billion), increased cost-sharing on beneficiaries with Medigap coverage ($12-53 billion), raise Medicare eligibility age to 67 ($124 billion), freeze income thresholds for high income beneficiaries and raise premiums ($13 billion) and chained CPI ($7 billion).   In a jobs-focused speech to a Joint Session of Congress, President Obama called on the Super Committee to come up with additional cuts to pay for his newly proposed American Jobs Act, such as through “modest adjustments” to Medicare and Medicaid.

As for committee action this past week, the Senate Appropriations Committee approved the Agriculture-FDA spending measure on Wednesday (HR 2112) and the Senate Health, Education, Labor and Pensions Committee advanced two health bills in a markup on Wednesday – reauthorization measures for graduate medical education at children’s hospitals (S 958) and autism research (S 1094).  Next week the Senate Committee on Health, Education, Labor and Pensions will hold a hearing on Wednesday, September 14 “Securing the Pharmaceutical Supply Chain” and the House Energy and Commerce Subcommittee on Health has scheduled a hearing on Thursday, September 15 titled, “Cutting the Red Tape: Saving Jobs from PPACA’s Harmful Regulations.”

The Obama Administration welcomed good news last week when a Virginia-based U.S. District Court of Appeals threw out two challenges to the health care reform law, the Affordable Care Act.  In a high profile case filed by the Commonwealth of Virginia by Attorney General Ken Cuccinelli, the court said that Virginia lacked standing to bring suit against the law.   The Attorney General filed the suit the day the Affordable Care Act was signed into law.  In the second case, filed by Liberty University of Lynchburg, Va., the appeals judges set aside a district court decision that the law is constitutional and ordered that the lawsuit be dismissed because the district court does not have jurisdiction to hear the challenge.  The Supreme Court is still likely to consider the constitutionality of the Affordable Care Act in the near future.

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Lieberman/Coburn Bipartisan Plan to Save Medicare and Reduce Debt

On June 28, 2011, Sen. Joe Lieberman (I-CT) and Sen. Tom Coburn (R-OK) presented a proposal– the Lieberman/Coburn Bipartisan Plan to Save Medicare and Reduce Debt – that would reform Medicare in order to save at least $500 billion over 10 years. The reforms include:

• Eliminating the variation in beneficiaries’ deductibles depending on the services provided and, instead, establishing an annual deductible of $550 for both Medicare Part A and Part B services;

• Establishing an “out-of-pocket maximum” of $7,500 for Medicare beneficiaries with higher income Americans having a higher out-of-pocket maximum;

• Increasing beneficiary cost-sharing in Medigap by requiring the enrollee to pay the first $550 in cost-sharing and limiting the coverage to half of the remaining coinsurance up to $7,500 of the new out-of-pocket maximum;

• Increasing the Medicare eligibility age to 67 by 2025;

• Accelerating the implementation of the productivity adjustments and rebasing for home health payments;

• Phasing out the Medicare payments for bad hospital debt;

• Requiring higher income Americans to pay more for Medicare Part B services;

• Increasing the Medicare Part B premium until enrollees premium level reaches a minimum of 35 percent of the program’s costs in 2019; and

• Requiring individuals 65 years of age and older who are making more than $150,000 annually ($300,000 for couples) to pay the full premium costs for their Medicare Part D coverage.

The plan would include provisions focused on preventing fraud, waste, and abuse from the “Medicare and Medicaid Fighting Fraud and Abuse to Save Taxpayer Dollars (FAST) Act” (S.1251), which was introduced by Sen. Tom Carper (D-DE) and Sen. Coburn. The Senators propose to use the cost savings generated from the above changes to pay for a three-year Medicare physician fee fix.

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Capital Thinking Podcast

Newly-elected Republicans have moved quickly to attempt a repeal of the health care reform legislation. Last week, the Senate voted on an amendment to the Federal Aviation Administration reauthorization bill that would have repealed the Affordable Care Act. The effort failed by a vote of 47-51. Senators voted along party lines with all Republicans voting for the repeal and all Democrats along with Independent Sen. Bernie Sanders voting against it. Sens. Joe Lieberman, an Independent, and Mark Warner, a Democrat, did not vote. This vote comes two weeks after the House successfully voted to repeal ACA. The Senate approved by a wide margin an amendment to eliminate the 1099 reporting requirement mandated by the Affordable Care Act. This followed the introduction of three separate bills to repeal the unpopular provision. The health care reform law requires that all businesses issue Form 1099 to vendors from which they purchase $600 or more of goods annually and file the information report with the Internal Revenue Service. The requirement is effective for payments made after December 31, 2011, and was included in health care reform as a revenue raising provision. The timing for repeal of the 1099 reporting requirement in the House is unclear; however, on February 17, the House Ways and Means Committee plans to mark up legislation to repeal the 1099 reporting requirement.

On January 31, a Federal judge in Florida issued a ruling declaring the entire health reform law – and the individual mandate, in particular – unconstitutional under the Commerce Clause and therefore “void.” The judge dismissed a separate claim challenging the legality of the Medicaid expansion. According to U.S. District Court Judge Roger Vinson, “Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications.” The Obama Administration has signaled that it will appeal the decision, and most experts believe that the case will be heard by the Supreme Court in the next couple of years.

On Thursday, CMS Administrator Don Berwick will make his debut on the Hill in appearing before the House Ways and Means Committee at a hearing examining the Affordable Care Act’s impact on Medicare beneficiaries. Richard Foster, Chief Actuary at the Centers for Medicare and Medicaid Services, will also testify at the hearing. During the week of February 14, Department of Health and Human Services Secretary Sebelius and White House Office of Management and Budget Director Jack Lew are scheduled to testify before the Committee about the President’s Fiscal Year 2012 Budget proposal.

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Last week, the House voted on the “Repealing the Job-Killing Health Care Law Act” (H.R. 2). The final vote on the bill was 245-189, with three Democrats – Reps. Dan Boren (OK), Mike McIntyre (NC), and Mike Ross (AR) – voting with the Republicans in favor of repeal. At this time, the Senate has no plans to take up consideration of the bill, which would be unlikely to pass and would almost certainly face a Presidential veto if it were to move successfully.

The House also took up and also passed H.Res. 9, instructing House Committees to recommend measures to replace the reform law. Specifically, the Resolution directs Committees to “proposing changes to existing law” that address many of their chief concerns with the health law including: provisions that spur economic growth and create jobs; lower health premiums; preserve patients’ ability to keep their health plan; provide people with pre-existing conditions access to coverage; reform medical malpractice; increase the number of insured; protect the doctor-patient relationship; provide States with more Medicaid flexibility; expand personal responsibility; prohibit taxpayer funding of abortions; eliminate waste; and do not accelerate the insolvency of entitlement programs. Along with the Resolution, the House adopted an amendment instructing lawmakers to permanently fix the Medicare physician payment formula.

The Committees will turn their attention this week to oversight hearings. The Ways and Means Committee will convene a hearing on Wednesday examining the economic and regulatory burdens resulting from the enactment and implementation of Affordable Care Act. Specifically, the Committee will consider the law’s impact on jobs stemming from the new taxes and new federal regulatory requirements and the impact of the employer mandate on job creation. The Senate Health, Education, Labor and Pensions Committee will hold a hearing on Thursday to discuss the impact of health care reform on consumers. Last week, the House Energy and Commerce Committee announced an investigation into the Office of Consumer Information and Insurance Oversight waiver process that House Republicans believe shield some entities from parts of the health care reform law. These activities foretell House Republicans’ clear focus on oversight of the Affordable Care Act during the 112th Congress.

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Health Care Podcast

As Members of Congress returned to Washington this week from their summer sabbatical, they took little time in getting back to business to address the long list of items slated for consideration in the remaining weeks before aggressive campaigning begins for the November mid-term elections. On Tuesday, the Senate took up consideration of a small-business lending bill, but rejected amendments from Senators Johanns and Nelson related to a provision in the health care bill that forces businesses to submit a 1099 report to the IRS for any payments greater than $600 in a given year. The Johanns amendment would have repealed the controversial requirement entirely and the Nelson amendment would have scaled it back significantly. After invoking cloture on the substitute amendment, the bill was ultimately passed on Thursday with the support of two Republican Senators and will now proceed to the House.

Also on Thursday, Senator Max Baucus, Chairman of the Senate Finance Committee, released a $50 billion package of tax-cut extensions. The “extenders” bill would renew a number of expired provisions and create a variety of new spending measures, although the cost would be fully offset by an increase in various controversial taxes. Debate over the extenders issue has already raged for much of the year and it appears as though it will only continue as Republicans seem unlikely to support the proposal due to their unwillingness to pay for extensions of existing tax policy.

The Senate appears to have stalled in its consideration of food safety legislation due to the efforts of Senator Tom Coburn, who strongly opposes the bill because of a lack of funding. It now appears doubtful that the bill can be passed before the November recess, much to the chagrin of food safety activists, although many remain optimistic that an agreement can be reached before the end of the year.

The House is scheduled to reconvene on Wednesday, at which time they are expected to consider the small-business lending bill passed by the Senate. Although Speaker Pelosi noted that she preferred the House version of the bill, she made it clear that her chamber would indeed act on the legislation. The Energy and Commerce Committee is also expected to mark up a slew of public health bills this week that were approved by the Subcommittee on Health last Thursday with broad bipartisan support. Additionally, it is being reported that House Democrats will release a new bill to repeal the 1099 reporting provision in the health care law and will attempt to hold a vote on it sometime this week. The cost of the bill will likely be paid for either through changes to the inheritance tax or by implementing a tax on carried interest.

September 23rd will be a major milestone in health care reform, as it marks the six month anniversary of the enactment of the health overhaul bill, the Patient Protection and Affordable Care Act. A number of the laws major provisions are scheduled to go in effect as the staggered implementation of the law begins to ramp up. Unfortunately, however, data released last week by the Census Bureau that shows the number of uninsured Americans to be at an all-time high only added force to the partisan debate on the Hill as both parties interpreted the information as proof for their divergent solutions. It is likely that such partisan feuds will only proliferate as the mid-term election approaches.

Congress plans to remain in session until around October 8, at which point it intends to recess until after the November 2 midterm elections.

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