Diane Rowland, Chair of the Medicaid and CHIP Payment and Access Commission (MACPAC), announced that Lu Zawistowich was named the Commission’s Executive Director and that the first public MACPAC meeting will be convened in September. The Commission was authorized in the Children’s Health Insurance Program Reauthorization of 2009 (P.L. 111-3). Congress appropriated funding for MACPAC in the Affordable Care Act.  MACPAC will advise Congress on Medicaid, CHIP, and health insurance exchange policies. 

Dr. Zawistowich most recently served as the Acting Deputy Director of the Office of Consumer Information and Insurance Oversight at the Department of Health and Human Services. She previously worked at the Centers for Medicare and Medicaid Services as well as at the Maryland State Department of Health and Mental Hygiene. 

On July 21, Democratic Rep. Lynn Woolsey introduced H.R. 5808 to amend the Affordable Care Act (ACA) to include a public plan option. The Congressional Budget Office CBO issued a letter to House Ways and Means Health Subcommittee Chairman Pete Stark noting that the bill would reduce the budget deficit by $53 billion over 10 years. The letter also states that the cost of insurance under a public plan option would be 5-7 percent lower on average. 

Including a public plan option in health care reform legislation was a controversial issue that did not ultimately have traction in the Senate’s Patient Protection and Affordable Care Act. The House-passed health care reform bill included a public plan option.  The rates under the Affordable Health Care for America Act would be negotiated and could not be less than Medicare rates, but not higher than the average rates of other health benefit plans. Rep. Woolsey’s legislation would set reimbursement rates under the public plan option as equal to Medicare plus 5 percent. Although the legislation has 128 co-sponsors, the House is unlikely to move the bill during this session of Congress. 

The National Association of Insurance Commissioners convened last week to develop a recommendation to HHS regarding the definition of medical loss ratio, which would serve determine the types of insurance spending that should count as medical spending. NAIC was charged with this role in the Affordable Care Act, which requires large group health insurance plans to spend 85 percent of premium dollars on clinical services and activities related to quality of care. The NAIC hopes to present a recommendation to HHS by mid to late August; although, its work could continue into September. Secretary Kathleen Sebelius must certify the Commissioners work. NAIC has also been tasked with developing standard insurance benefits and enrollment forms and regulations for the state-based exchanges.

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Last week, the White House announced President Obama’s recess appointment of Donald Berwick as CMS Administrator. Dr. Berwick is a pediatrician and professor at Harvard University and the founder the Institute for Healthcare Improvement. He launched the“100,000 Lives” campaign to reduce the number of deaths attributable to medical errors in hospitals. He has previously served as Vice Chair of the U.S. Preventive Task Force, member of the Board of Trustees of the American Hospital Association, Chair of the National Advisory Council of AHRQ. Dr. Berwick was sworn in on July 12.   

The Constitution provides an exception to the Senate confirmation process for nominations. When the Senate is in recess, the President may make a temporary appointment known as a “recess appointment” without Senate approval. President Obama is making the appointment during a recess in the middle of a session, so Dr. Berwick’s appointment will expire at the end of the following session or at the end of the first session of the 112^th Congress. President Obama has made 15 recess appointments, not including Donald Berwick.

Senate Minority Leader Mitch McConnell, along with Republican Senators John Barrasso, Pat Roberts and Tom Coburn have objected to President Obama’s move noting that confirmation hearings had not been scheduled to allow for consideration of the nominee. Senate Finance Committee staff have responded to the announcement noting that Republicans have urged Leadership to expedite Dr. Berwick’s confirmation hearing and hold his hearing before Supreme Court Justice nominee Elena Kagan’s hearing.    

Republicans on the Senate Finance Committee sent a letter to Chairman Baucus requesting a hearing on the appointment of Dr. Berwick. The letter requests a chance for Dr. Berwick “to present his qualifications for the position in the usual process” so as not to create “a shadow over his legitimacy and authority to serve as Administrator during a critical time for CMS.”  Republican members of the House Ways and Means Committee also urged a hearing with Dr. Berwick.

The Office of Management and Director Peter Orszag has announced that his last day at his post will be July 30.  President Obama announced that he will appoint Jack Lew as the new OMB Director. Mr. Lew currently serves as an aide to Secretary of State Hillary Clinton and previously worked as the budget director for former President Bill Clinton. Given the current budget deficit, the new OMB Director will certainly continue the focus on reducing the deficit.         

The Chairmen of the National Commission on Fiscal Responsibility, former Republican Senator Alan Simpson of Wyoming and Erskin Bowles, former chief of staff to President Bill Clinton, spoke to the National Governor’s Association and relayed that Congress must examine any and all proposals to contain entitlement programs, particularly Medicare and Medicaid. The Commission is required to develop a plan by December 1 to reduce the deficit. 

Prior to the August recess, the Senate is expected to consider the “Small Business Lending Fund Act” (H.R. 5297), which was introduced by Rep. Barney Frank (D-MA) to address the impact of the financial crisis on small businesses. The Senate will also consider the House-amended war supplementing spending bill before it adjourns. The House amended the Senate-passed bill to include Senator Herb Kohl’s (D-WI) legislation, the “Preserve Access to Affordable Generics Act,” which would ban agreements between brand name and generic drug manufacturers. Senator Kohl has called such agreements “one of the most egregious tactics used to keep generic competitors off the market leaving consumers with unnecessarily high drug prices.” The Generic Pharmaceutical Association, however, expressed opposition to the amendment noting that such agreements have, at times, allowed generic drugs to come to market before the patents of the name brand drugs expire.

Last week, the House and Senate adjourned for the Fourth of July recess without extending the Medicaid FMAP funding increase or COBRA insurance despite the call of numerous Governors on Congress to extend the enhanced FMAP funding through June 2011. Republican Senators continue to object to extending these provisions unless they are fully offset. Republican Senator Scott Brown of Massachusetts introduced a bill to extend the FMAP funding. The bill would be paid for with unused stimulus funding. However, reapportioning stimulus funding stands little chance of being politically palatable to Democrats. Congressional staff have signaled determination in passing an FMAP extension, perhaps in a supplemental spending bill or Gulf relief legislation.

The House amended and passed a Senate-approved war supplementing spending bill before it adjourned. The House amended the bill to include Senator Herb Kohl’s legislation, the “Preserve Access to Affordable Generics Act,” which would ban agreements between brand name and generic drug manufacturers. Senator Kohl has called such agreements “one of the most egregious tactics used to keep generic competitors off the market leaving consumers with unnecessarily high drug prices.” The Generic Pharmaceutical Association, however, expressed opposition to the amendment noting that such agreements have, at times, allowed generic drugs to come to market before the patents of the name brand drugs expire.

Last week, the Centers for Medicare and Medicaid Services released the 2011 Physician Fee Schedule Proposed Rule. CMS estimated that without Congressional action, physician payments would be cut by 23 percent beginning on December 1 and reduced by an additional 6.1 percent beginning January 1, 2011. Congress is almost certain to have a lame duck session in which Members will pass another short-term SGR fix.

Capital Thinking Radio Show July 1, 2010

If you missed the Capital Thinking Radio Show with Kevin O’Neill last week, listen to the podcast on demand. 

Join us as we examine the hurdles of turning the new health care bill into a reality with advocacy leaders John Jonas and Julie Black.

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On June 24, the House passed the “Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010,” which will increase Medicare reimbursement to physicians by 2.2 percent through November 30, 2010.  President Obama signed the legislation into law on June 25.  Amy Hall, Director of the Office of Legislation at the Centers for Medicare and Medicaid Services (CMS) issued a notice to Hill staff explaining that Medicare physician “claims containing June 2010 dates of services which have been paid at the negative update rates will be reprocessed as soon as possible.”  The notification indicated that contractors have been instructed to stop processing claims with the 21 percent cut and to hold claims for services provided in June until the 2.2 percent update is loaded into the claims processing systems.      

After eight weeks of consideration of various versions of the “American Jobs and Closing Tax Loopholes Act of 2010” (H.R. 4213) that would extend the Medicaid FMAP funding increase, COBRA insurance, and unemployment benefits, the Senate continues to be in a holding pattern.  Senate Majority Leader Harry Reid most recently failed to get 60 Senators to support cloture on June 24.  Senator Ben Nelson voted with Republicans to block the measure.   The majority has not signaled whether it will try to pass another version this week, but it is the last week Congress is in session before the week-long July 4^th recess.

HHS has two major deadlines mandated by the health reform law, the Affordable Care Act, this week – the Department must establish high-risk pools and launch a health insurance web portal by July 1.  Thirty-one states have agreed to run their own high-risk pools, while 20 states will have pools administered by the federal government.

This week the House Education and Labor Committee will hold a hearing on H.R.5504, the “Improving Nutrition for America’s Children Act.”  The bipartisan bill aims to improve the meals children eat both in and out of schools, as well as support community efforts to reduce childhood hunger.  Additionally, the legislation establishes nutrition standards for all foods sold in schools.  The Senate Agriculture Committee has already marked-up its version of a child nutrition reauthorization bill, which awaits floor time.

After another turbulent week in the Senate, Senate Majority Leader Harry Reid was only able to pass a six month SGR extension by unanimous consent. The fix applies through November 30, 2010 and is fully offset using various revenue raisers. The significantly trimmed down bill only addresses physician payments under Medicare and does not include unemployment compensation, Medicaid FMAP funding, COBRA insurance subsidies, or any of the other health provisions included in the previous versions of a substitute amendment that failed to garner enough votes to pass though the Senate.

 Because the House of Representatives adjourned last weekend, the lower chamber must consider the legislation early next week before the payment changes take effect. Subsequently, the Center for Medicare and Medicaid Services (CMS) has directed Medicare contractors to begin processing physician reimbursements for the month of June with the scheduled 21.2% cut mandated by law. With regard to the broader extenders package, Senator Reid did not signal when or how the majority intends to proceed on that measure.

The Office of the National Coordinator for Health Information Technology issued a final rule to establish a temporary certification program for electronic health record technology. The temporary certification program establishes processes that organizations will need to follow in order to be authorized by the National Coordinator to test and certify EHR technology. ONC said it expects to release a final rule on the permanent EHR certification program this fall.

The week the House Energy and Commerce Health Subcommittee will hold a hearing on the Medicare Payment Advisory Commission’s June 2010 Report entitled Aligning Incentives in Medicare. The report will address MedPAC’s recommendations on Graduate Medical Education payments, policy options to address the increase of in-office ancillary services, and coordinating care for dual eligibles.

After a fairly quiet Congressional recess, the Senate is expected to address pending cuts to physicians that treat Medicare patients when they return this week.  Before Congress left town, the House voted to postpone the 21 percent payment cut for 19 months.  However, other health care benefits, such as an extension of COBRA, which helps unemployed individuals retain their former employer’s health insurance, and enhanced federal payments to states for Medicaid were removed from the bill prior to House passage.  Conservative Democrats voiced concern over the provisions because they added billions of dollars to the deficit.

HHS Secretary Kathleen Sebelius announced the availability of $60 million in Affordable Care Act grants to states and communities to help individuals and their caregivers better understand and navigate their health and long-term care options.  The Administration on Aging and the Centers for Medicare & Medicaid Services will work collaboratively towards an  integrated approach that focuses on the unique needs of seniors, disabled Americans and their caregivers as they seek health care and long-term care.  Funds will be available to states, area agencies on aging, State Health Insurance Assistance Programs, and Aging and Disability Resource Centers.

The Congressional recess did spark debate within the blogosphere over a New York Times article that critiqued the Obama Administration’s use of data from the Dartmouth Atlas Project, an influential research body that has demonstrated geographic variations in the amount of care that hospitals and doctors provide.  The article suggested that the research was only a map of the quality of care provided across the country and could not be used to justify wasteful spending or inefficient care in the health care system as a whole.  Jonathan Skinner and Elliot Fisher, leaders of the Dartmouth Project disputed the Times article stating that it had misrepresented the facts. 

Physician Fee Fix and Extenders Legislation 

The Senate did not act to extend the physician fee fix that would prevent a 21 percent Medicare payment cut from going into effect on June 1.  The House and Senate were poised to consider the “American Jobs, Closing Tax Loopholes and Preventing Outsourcing Act of 2010,” which would have provided an update to physicians for the remainder of 2010 and 2011, increased payments in 2012 and 2013 if spending growth is within reasonable limits, and provided an extra allowance for primary and preventive care in 2012 and 2013.

Due to concerns regarding the bill’s cost, which was scored at $200 billion, House Leadership scaled back the physician fee fix, COBRA, and unemployment extensions. That version of the bill would have provided a 2.2 percent update to physicians for the remainder of 2010 and a 1 percent increase in 2011 bill at a cost of $144 billion. 

In an effort to prevent the 21 percent Medicare physician payment cut, House Leadership separated the legislation into two pieces – the physician fee fix provision and other extenders. The extenders piece no longer includes an extension of COBRA and FMAP. Today, the House voted 245-171 to adopt the 19-month physician fee fix and 215-204 for the extenders package.      

The Senate is not expected to consider the physician fee fix or extenders legislation until the week of June 7.

CMS has already instructed MACs to hold Medicare physician claims for 10 days. 

Health Information Technology Grants

The Office of National Coordinator for Health Information Technology (ONC) at HHS announced that they will award an additional $30.3 in Beacon Community Cooperative Agreement Program grants. The grants will provide funding to allow communities to build and strengthen their HIT infrastructure.  Letters of intent are due on June 9, 2010, and grants will be awarded in August 2010. In May, ONC awarded 15 Beacon grants totaling $250 million.

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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.