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.

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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.

Last night, 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.      

Congress is likely to reconvene after the November elections for a lame duck session. The short-term SGR fix along with a number of Medicare extenders that were included in the Affordable Care Act (ACA) will expire before the end of the year. In addition to addressing the Medicare physician reimbursement rate, Congress will likely extend:

• the floor on geographic adjustments to the work portion of the Medicare physician fee schedule;
• the process of allowing exceptions to limitations on medically necessary therapy;
• the policy that directly reimburses qualified rural hospitals for specified laboratory services;
• bonus Medicare payments to ambulance services provided in rural and other areas; and
• the physician fee schedule mental health add-on to increase the payment for psychiatric services.

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.

This week the Senate will resume consideration of the “American Jobs and Closing Tax Loopholes Act” (H.R. 4213), a substitute amendment released by Senate Finance Committee Chairman Max Baucus. The legislation would provide 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. The key difference in the health provisions of the House and Senate extenders legislation is that the Senate version includes a six-month extension through June 30, 2011 of the enhanced Federal Medicaid Assistance Percentages (FMAP) rate. Senate Republicans introduced an alternative package that reduces the deficit by $55 billion. The amendment extends the “doc fix” an additional year and provides a 2 percent increase in reimbursement levels for 2010, and additional 2 percent increases in both 2011 and 2012.  Other potential amendments filed include an extension of COBRA benefits for unemployed worker health insurance, and adjustments to the 340B inpatient discount program.

The Administration continues to promote the effects of the new health care reform law across the country. President Obama hosted a town hall meeting to announce the mailing of $250 checks to assist seniors whose drug coverage found them in the “dount hole” causing high out-of-pocket costs for prescription drugs.

Chairman of the House Education and Labor Committee George Miller introduced the House’s version of a child nutrition reauthorization bill, the “Improving Nutrition for America’s Children Act.” The legislation would authorize the Department of Agriculture to set nutrition standards for all foods sold or served at schools, as well as raise reimbursement rates for schools that meet higher nutritional standards, and improved food safety requirements for schools meals programs. Additionally, it aims to improve program administration, support services and program access and modernize the WIC program by extending period of certification for children, increasing support for breastfeeding, and transitioning from paper food vouchers to an electronic benefit program. Chairman Miller stated that the legislation mirrors key investments proposed by President Obama and First Lady Michelle Obama in her “Let’s Move” initiative, including reducing childhood obesity and improving school wellness. The Senate version has already been considered by the Senate Agriculture Committee and awaits floor time.

This week, the Health Subcommittee and the Oversight Subcommittee of the House Ways and Means Committee will hold a joint hearing on reducing fraud, waste and abuse in Medicare on Tuesday, and the Health Subcommittee of the House Energy and Commerce Committee will hold a hearing titled “NIH in the 21st Century: The Director’s Perspective” also on Tuesday.

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. 

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Congress to Consider Extenders Legislation This Week

This week, the House and Senate are expected to consider and vote on the “American Jobs and Closing Tax Loopholes Act” (H.R. 4213). House Ways and Means Committee Chairman Sandy Levin and Senate Finance Committee Chairman Max Baucus released the tax extenders legislation last week, which includes several health care provisions, including a six-month extension of the temporary increase in Federal Medicaid Matching Rate and extension of COBRA premium subsidy for individuals terminated on or before December 31, 2010. The bill would also provide an update to physicians for the remainder of 2010 and 2011. Payment rates would increase in 2012 and 2013 if spending growth is within reasonable limits. The bill provides an extra allowance for primary and preventive care in 2012 and 2013.

IRS Issues Guidance on Therapeutic Discovery Project Program

The Administration continues to rollout health reform regulations. Last week, the Internal Revenue Service released guidance on the Therapeutic Discovery Project Program that was established in the Patient Protection and Affordable Care Act. The health reform law authorized a two-year tax credit designed to encourage investments in new therapies to prevent, diagnose, and treat chronic diseases. Firms with 250 employees or less could receive up to 50 percent of the cost of biomedical research up to a maximum credit of $5 million. Applications for the credit are due on July 21, 2010. The IRS will make determinations of eligibility for credits no later than October 29, 2010.

National Commission on Fiscal Responsibility Reconvenes

The National Commission on Fiscal Responsibility will convene for its second meeting, this time on the Hill, on Wednesday. The meeting will be webcast at www.whitehouse.gov/live. The Commission has issued a request for comments and ideas to address the country’s fiscal challenges. Comments can be emailed to commission@fc.eop.gov and will be part of the public record.

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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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Congress Extends SGR Fix

The sustainable growth rate physician payment formula faced a roller coaster ride to the finish line. The Senate adjourned for spring 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.  Upon return from recess, after much debate regarding the degree to which the legislation would increase the deficit, the Senate passed H.R. 4851 as amended by a vote of 59-38 to extend the physician fee fix through May 31. On April 15, the House agreed to the Senate-amended legislation by a vote of 289-112, and the President signed the bill into law.

The House and Senate are expected to use the “Tax Extenders Act of 2009” (H.R. 4213) as the basis for continuing negotiations about how to extend the physician fee fix and benefits through 2010. The House and Senate both passed different versions of the legislation earlier in the year, but several offsets were used in the newly enacted health care reform laws.      

The American Medical Association has relayed to its membership its expectations that Congress will consider repealing the SGR formula later this year.  However, last October, the Senate failed to gain the support of 60 Senators to proceed to floor consideration of S. 1776, the “Medicare Physicians Fairness Act of 2009.”  The legislation would have frozen physician payments at a 0 percent update to prevent the 21 percent payment and sunset the SGR formula. While Senators largely agree that the sustainable growth rate, known as the SGR, is flawed and must be replaced, moderate Democrats and Republicans opposed the measure on the basis of the $245 billion price tag.  

President Obama Nominates Donald Berwick as CMS Administrator

Last week, President Obama formally nominated Donald Berwick, a pediatrician and professor at Harvard University, to serve as the CMS Administrator. Dr. Berwick must be confirmed by the Senate.  As the Administrator, he would be responsible for overseeing the implementation of the Patient Protection and Affordable Care Act and the health-related provisions in the Reconciliation Act of 2010. 

Dr. Berwick currently is a clinical professor of pediatrics and health policy at the Harvard Medical School and a professor in the Department of Health Policy and Management at the Harvard School of Public Health. 

Dr. Berwick is considered a renowned expert in quality of care. In 1991, Dr. Berwick founded the Institute for Healthcare Improvement (IHI) to develop best practices. He led a “100,000 Lives” campaign to establish practices to reduce the number of deaths attributable to medical errors in hospitals. He previously served as Vice Chair of the U.S. Preventive Task Force, a member of the Board of Trustees of the American Hospital Association, Chair of the National Advisory Council of the Agency for Healthcare Research and Quality (AHRQ), and as a member of President Bill Clinton’s Advisory Commission on Consumer Protection and Quality in the Healthcare Industry. 

Charlene Frizzera has served as Acting Administrator since President Obama took office in January 2009. She will continue to work in the Administrator’s Office to assist with the implementation of health care reform. CMS has not had a permanent Administrator since October 2006. 

CMS Principal Deputy and Chief Operating Officer, Marilyn Tavenner, relayed to staff that the reorganization of the Agency announced in February is effective. The goal of the reorganization is to focus on beneficiary services, program integrity, and strategic planning.  Principal Deputy Tavenner also announced that Caya Lewis, currently serving in the HHS Office of Health Reform and a former Senator Ted Kennedy staffer, will join CMS as the Chief of Staff.

Senate Considers FY2011 Budget Resolution

The President’s push to complete work on health care reform legislation consumed Congress during the first quarter of the year.  However, Congress must now turn its attention to preparing the Fiscal Year (FY) 2011 budget resolution. In accordance with the 1985 Balanced Budget Act, Congress is required to adopt a Budget Resolution by April 15. The Act also requires the Senate Budget Committee to report a Budget Resolution by April 1. Senate Budget Committee Chairman Kent Conrad (D-ND) began mark up a resolution during last week. The Chairman’s mark would reduce the deficit by $2 billion over FYs 2010-2015 and includes a reserve fund to improve health care, which could be used to increase physician payment rates under Medicare, address health care workforce shortages, increase or repeal Medicare outpatient therapy caps, extend expiring Medicare and Medicaid provisions. The FY 2011 budget resolution will establish budgetary targets that will help to shape spending bills for the Fiscal Year.

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.