Health Care Reform Implementation Update

On Friday, December 3, the Medicare Payment Advisory Commission (MedPAC) released its draft recommendations for fiscal year 2012. MedPAC recommends that hospitals receive a 1 percent net increase in inpatient and outpatient payment rates and a 1 percent increase in physician payments. The commission will vote on these and other recommendations in mid-January before releasing its report to Congress on March 15.

Last week President Obama signed legislation that will avert for one month a 23 percent cut in Medicare reimbursement rates for physicians. The cuts were scheduled to take place starting December 1, 2010.

On Wednesday, December 1, President Obama’s National Commission on Fiscal Responsibility and Reform released its final report, “The Moment of Truth.” The report proposes overhauling the way Medicare pays its physicians through holding off future cuts and ultimately reducing the reimbursement rate by 1 percent. The Commission suggested that the Centers for Medicare and Medicaid Services (CMS) refigure both how physicians are paid and the value of the services they provide. Other suggestions included in the Commission’s proposal were the restructuring or repeal of the long term care insurance program created in the new law, raising the Medicare eligibility age, and placing dual-eligible beneficiaries in Medicaid managed care plans. Though the proposal earned a majority in the Commission with an 11-7 vote, it failed to achieve the 14 votes necessary to send the proposal to Congress.

In a December 2 letter to CMS, the American Medical Association submitted comments on recommendations for structuring the Accountable Care Organizations (ACOs) that will be created under the new health care law. The letter includes recommendations to create new payment methods, increase access to loans and grants for small physician practices, ease antitrust restrictions that prevent physicians from collaborating, and increase timely access to quality data.

Reaction to the Patient Protection and Affordable Care Act (PPACA) continues at the state level. In Wisconsin, Republican Governor elect Scott Walker wrote to President Obama requesting maximum state flexibility in meeting the healthcare reform law’s coverage requirements. In South Carolina, Republican Governor elect Nikki Haley stated on Wednesday (December 1) that she will ask President Obama to allow states to opt out of the new federal health care law. In Louisiana, State Secretary of Health and Hospitals, Bruce Greenstein, said that Louisiana is struggling over whether it will set up its own health care exchange or call on the federal government to do so. Further, some states are complaining that the expansion of Medicaid under the health care law will impose so many new costs and regulations that they are considering opting out of the program altogether. On a related note, Senator Roger Wicker (R-Miss.) is planning to introduce a bill that would allow state officials to file legal briefs challenging the constitutionality of proposed regulations during the time when they are open for comment.

A report released December 3, 2010, by the state of Texas found that Medicaid and CHIP are taking a large toll on the state’s budget. However, the report also found that opting out of the federal programs would destroy Texas’s healthcare delivery system. The report explains that many of the methods for fixing Medicaid spending in Texas will require acts of Congress to give the state greater flexibility in how the programs are run and a greater share of the national Medicaid financing. The report also suggested that the federal government should take over 100 percent financing of health care for non-citizens in Texas, which it said is costing the state program more than $500 million a year.

On December 2, the Department of Health and Human Services (HHS) unveiled Healthy People 2020, a new 10-year plan to improve the health of all Americans. As part of the plan’s rollout, HHS announced a competition called "myHealthyPeople.” The competition asks application developers to create and submit easy-to-use software applications to support the initiative. The closing date for application developers to submit their technology is March 7, 2011.

Virginia Attorney General Ken Cuccinelli is considering filing a petition with the United States Supreme Court asking that the case regarding the state’s lawsuit over the federal health care overhaul be allowed to bypass the appeals court process and go straight to the Supreme Court for a ruling. Regardless of that outcome, many believe the case will end up before the Supreme Court.

On November 30, Administrator Donald Berwick announced management changes at CMS. Julie Boughn will be the new Acting Deputy Director of the newly created Center for Medicare and Medicaid Innovation. Dr. Berwick also announced Tony Trenkle as the acting head of the Office of Information Services. Trenkle had previously been serving as director of the Office of E-Health Standards and Services and will be replaced by Karen Trudel. Additionally, Joe McCannon and Vish Sankaran will serve as senior advisors to Dr. Berwick

On Thursday, December 2, the U.S. Treasury Department released guidance for The Affordable Care Act’s Small Business Tax Credit. The changes included are intended to make it easier for companies to apply and qualify for the tax credit. The Congressional Budget Office estimates that the tax credit could save small businesses as much as $40 billion dollars by 2019. The credit is available to businesses with less than 25 full-time employees, whose annual wages average to below $50,000 and that also pay at least 50 percent of their employees’ insurance premium costs. Among the new changes announced by the Treasury is the ability for employers to use a new one-page IRS form (Form 8941) to claim the credit for the 2010 tax year and also the allowance for employers who use a range of arrangements to pay for their workers’ coverage to be eligible for the credit.

According to a November 30 report released by the Employee Benefit Research Institute, medical costs for retirees fell in 2010. Some of these decreased costs were attributed to changes in Medicare prescription drug costs given by the healthcare law. Despite these lower costs, the study found that for a 65-year-old man to retire in 2010 with a 50 percent chance of having enough money saved for health expenses, he would need $65,000 in savings, and a woman in the same circumstances would need $93,000. Additionally, in order to have a 90 percent chance of having enough money to cover expenses, the report suggests that men with average health care expenditures should have $124,000 set aside, while women would need $152,000.

On November 29, CMS released its final rule on Section 6003 of the Patient Protection and Affordable Care Act, which amends the Stark Law. The Stark Law currently prohibits physicians from referring patients for certain designated services to any entity in which the physician or the physician’s family has a financial interest. The new changes will require physicians who refer beneficiaries for in-office MRIs, CT and PET scans to provide patients with a list of at least five other suppliers of these tests in the area. The rule also specifies that a written notice of other supplies must be provided each time a referral for a MRI, CT or PET scan occurs.

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