On Wednesday, June 23, 2010, the House Energy and Commerce Subcommittee on Health held a hearingentitled “MedPAC’s June 2010 Report to Congress:  Aligning Incentives in Medicare.”  The hearing examined the findings and recommendations proposed in the report submitted by the Medicare Payment Advisory Commission (MedPAC) to Congress on June 15, 2010.

MedPAC Chairman Glenn Hackbarth testified that the Commission has offered 26 recommendations in two reports to Congress this year.  He highlighted areas where MedPAC commissioners have reached strong consensus, such as the unsustainability of Medicare and the need to look for ways to slow the growth rate of expenditures, while improving access and quality.  He stated that there needs to be consistent pressure applied to all health care services to look for ways to change relative values of payments and opportunities need to be examined that signal the type of care beneficiaries need and to reward that type of care.  As an example, he highlighted the medial home concept.  Additionally, Chairman Hackbarth stated that there still needs to be a robust and value-focused Medicare Advantage (MA) program because private plans have the ability to provide care in ways that traditional Medicare does not. 

He explained that it is important to reform how Medicare pays for Graduate Medical Education (GME).  Chairman Hackbarth stated that the Commission believes the GME system is the envy of the world, but the current system is not consistently producing physicians that the system needs to move towards a value-based health system.  He noted two types of deficits in the system: 1) the mix of physicians being produced (i.e. lack of racial and ethnic diversity; and 2) content of training, evidence-based medicine, team coordination, or shared decision making is not focused on.  Chairman Hackbarth stated his support for The Accreditation Council for Graduate Medical Education (ASCGME) for working on an outcomes project to refocus training on new skills and a focus on higher value health care, but urged rapid movement on implementing value-based standards.

Republican Members of the Committee largely used the hearing as a platform to air its grievances about the health reform law.  Chairman Waxman described the Republican comments as “propaganda.” 

 The majority of members were concerned that MedPAC’s recommendation to restructure GME funds would actually take money away from teaching hospitals.  Chairman Hackbarth reiterated that MedPAC was not recommending that money be taken away from hospitals, but that greater accountability be established for the funds.  Specifically, MedPAC recommended that the GME funds move away from being contingent upon fee-for-service and move towards value-based care.  He stated that the proposed standards for value-based GME payments would take effect in three years, which would give institutions time to conform.  Chairman Hackbarth declared that  Medicare could be the lever for this change. 

Rep. Donna Christensen (D-VI) stated that when CMS institutes a least costly alternative (LCA) policy, providers often face a financial loss when they prescribe a product that is more expensive.  She asked to the extent that Congress grants CMS explicit authority to institute LCA policies for drugs and biologics, what safeguards does MedPAC recommend so that access to medically needed therapies are appropriately observed.  Chairman Hackbarth stated that least costly alternative policies and reference pricing need to be informed by the best clinical evidence and the process needs to be transparent where all interested parties have the opportunity to present information to CMS.  He noted that MedPAC reported that it would be advantageous to give CMS and the Secretary of HHS more flexibility to execute these policies, but it does not mean abdication by Congress.  Chairman Hackbarth noted that Congress could reserve the right override policies.

Rep. Gene Green (D-TX) inquired whether there will be a problem within the Agency for the newly created Center for Medicare and Medicaid Innovation (CMI).  Chairman Hackbarth explained that the health reform law took a major step in giving the Secretary broader authority for testing new ideas in Medicare, but that in order to meet the challenges that Medicare faces, CMS will need to change the process for testing new ideas.  He noted that currently innovation is painfully slow, but that the health reform law could accelerate the process.  Chairman Hackbarth stated that his greatest concern is that resources will be needed to implement successful demonstrations. He also asked about self-referral and imaging services.  Chairman Hackbarth stated that there is variability among the different types of imaging services, but that the combination of physician ownership, fee-for-service, and mispricing of services leads to over-utilization.

With great fanfare, President Obama signed into law the Patient Protection and Affordable Care Act last Tuesday. By a vote of 56-43, the Senate passed an amended version of H.R. 4872, the Reconciliation Bill of 2010 last Thursday. Sens. Lincoln, Pryor, and Ben Nelson joined Republicans in voting against the legislation. Later that evening, by a vote of 220-207, the House passed the amended Reconciliation bill. The bill now goes to President Obama for his signature.

The passage of the Patient Protection and Affordable Care Act and the Reconciliation Bill of 2010 brings to a close the legislative work on comprehensive health care reform that began in November 2008 when Senate Finance Committee Chairman Max Baucus released his “Call to Action” white paper on health care reform.

House and Senate Republicans have already introduced legislation to amend the Patient Protection and Affordable Care Act to require the President, Vice President, Members of Congress and their staff to purchase health care insurance through the Exchange. At least four other pieces of legislation that amend the health care reform law have been introduced, and we expect that Republicans, in particular, will continue to seek changes through legislative action. Republicans are also expected to mount challenges to reform by opposing funding for the newly authorized entities and programs in the Fiscal Year 2011 appropriations bills. Congress will at some point certainly consider technical, if not policy, changes to the newly enacted legislation.

The challenges of implementation now loom large. For example, the Department of Health and Human Services must develop a number of new insurance regulations. The government will also establish a temporary risk-pool for uninsured individuals who have pre-existing conditions and create the health care exchanges in 2014.

The buzz about a Presidential nomination for the Center for Medicare and Medicaid Services Administrator were kicked up again late last week. It is thought that the President could nominate Donald Berwick, a pediatrician and professor at Harvard University, as early as sometime this week. A CMS official has acknowledged that Dr. Berwick has been under consideration for the position, which would require confirmation by the Senate. Charlene Frizzera has served as Acting Administrator since President Obama took office in January 2009.

The Senate adjourned for recess without passing an extension of the Medicare physician fee fix to prevent a 21 percent payment cut from going into effect on April 1. Earlier this month, the House passed the Continuing Extension Act of 2010 to extend the physician fee fix through April 30. The Senate attempted to pass the legislation by unanimous consent, but Senator Tom Coburn of Oklahoma objected. He opposed consideration of the legislation on the basis that the bill is not paid for and would increase the deficit by $9.2 billion. We expect that CMS will issue a notice this week instructing Medicare physicians to hold their claims for some time.

While many are breathing a sigh of relief that the debate on health care reform legislation is done, the difficult work of implementation is just about to begin.

Following House passage of the Senate health care reform legislation, Representative Nathan Deal resigned so he can focus on the Georgia’s governor’s race. Representative John Shimkus of Illinois has been tapped as the new House Energy and Commerce Health Subcommittee Chairman.