Wednesday, July 25, 2007

Capitol Hill Watch

House Democrats Unveil SCHIP Legislation That Would Increase Cigarette Tax, Reduce Payments to Medicare Advantage Plans

      House Democrats on Tuesday introduced legislation that would reduce payments to Medicare Advantage plans and increase the federal cigarette tax by 45 cents per pack to fund SCHIP and make revisions to Medicare, the AP/Houston Chronicle reports (Freking, AP/Houston Chronicle, 7/24). The legislation, called the Children's Health and Medicare Protection Act, would reauthorize SCHIP and increase funding for the program by $50 billion over five years. The expansion would allow an additional five million to six million children to enroll in the program, according to House Energy and Commerce Committee Chair John Dingell (D-Mich.) (Johnson [1], CongressDaily, 7/25).

In addition, the legislation would:

• Delay scheduled Medicare physician payment cuts totaling 10% in 2008 and 5% in 2009 and replace them with 0.5% increases in each of the next two years;
  
  
• Create a mechanism for physicians to give feedback on treatment resources compared with their peers for similar beneficiaries and create a pilot program in which doctors get paid to provide a "medical home" to coordinate care;
  
  
• Increase Medicare benefits for preventive care and mental health care, raise the value of assets low-income seniors can have and still qualify for the Medicare prescription drug benefit and cover more out-of-pocket Medicare costs for lower-income elderly beneficiaries;
  
  
• Equalize payments between MA plans and Medicare's traditional fee-for-service program by 2011;
  
  
• Reduce payments to home health agencies, skilled nursing facilities, inpatient rehabilitation facilities and long-term acute care hospitals;
  
  
• Eliminate a "trigger" provision in the 2003 Medicare law that requires the president to propose legislation on reducing Medicare spending if the program's trustees find for two years in a row that Medicare is projected to draw more than 45% of its funding from general government revenues;
  
  
• Eliminate co-insurance and waive the deductible for current preventive benefits covered by Medicare;
  
  
• Reduce payments for mental health services from the current 5% copayment to the standard 20%; and
  
  
• Give Medicare the authority to use recommendations by the U.S. Preventative Health Services Task Force to add new preventive benefits without congressional approval (Carey/Reichard, CQ HealthBeat, 7/24).
  

The bill is expected to cost about $90 billion. The tobacco tax increase is projected to raise about $27 billion and MA plan reimbursement reductions will raise close to $50 billion, according to House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.). In addition, savings from reductions in payments to home health, skilled nursing and rehabilitation providers will be used to fund the measure (Johnson [1], CongressDaily, 7/25). The reductions in payments are consistent with recommendations from the Medicare Payment Advisory Commission (CQ HealthBeat, 7/24).

SCHIP Eligibility
Under the bill, states would continue to have the option of applying for waivers to provide SCHIP coverage to adults and higher-income children, according to House Energy and Commerce Health Subcommittee Chair Frank Pallone (D-N.J.) (Johnson [1], CongressDaily, 7/25). States also would have the option of enrolling in SCHIP certain low-income pregnant women and documented immigrant children and pregnant women. In addition, the legislation would give the states the option to enroll in Medicaid and SCHIP children up to age 24. States would receive higher payments for following specific practices intended to increase enrollment and would receive payment adjustments if they run out of funds enrolling eligible children. States would have two years to spend the federal allotment received each year. The House bill is expected to cover two million more children than the Senate version of the legislation approved last week by the Senate Finance Committee but estimates from the Congressional Budget Office are not yet available for the House proposal.

Medicare Advantage
The bill would equalize payments between MA plans and traditional Medicare over five years, reducing federal reimbursements by close to $50 billion over that time period. The bill would not change the reimbursement rates in 2008, but in 2009, payment benchmarks to MA plans would be a mix of two-thirds of the current private plan payment system and one-third of traditional Medicare rates. In 2010, payment benchmarks would be a mix of one-third of the current private plan payment system and two-thirds of the traditional Medicare rates. Payments would be equalized in 2011, with plans that fail to bid below the reduced benchmarks barred from enrolling new members that year.

Physician Reimbursement Changes
Under the bill, a scheduled cut in Medicare payments to physicians would be reversed and physicians would receive a 0.5% increase in fees for each of the next two years. In addition, the bill would make revisions to the system that sets spending targets for Medicare outlays for physicians' care. Rather than setting a single spending target for all Medicare care, the system would sort outlays into six different categories with different spending targets for each category. The categories include: primary and preventive care; other evaluation and management services; anesthesia; imaging; major procedures; and minor procedures.

Outlays that surpass spending targets must be offset in following years in the form of payment reductions. The reimbursement revisions are "meant to increase incentives for doctors not to overprescribe tests, visits and procedures," according to CQ HealthBeat. The bill also provides for a "bundled payment" system for dialysis facilities to encourage proper dosage of anemia drugs to dialysis patients. The reimbursement revision provision also creates a mechanism to provide physicians with feedback on the level of treatment resources they prescribe as compared to peers who treat similar beneficiaries (CQ HealthBeat, 7/24).

Senate Republican Alternative Bill
In related news, Senate Minority Leader Mitch McConnell (R-Ky.) circulated a letter to Senate Republicans announcing his plans to offer a "comprehensive" alternative to the bipartisan SCHIP legislation when the bill moves to the Senate floor, CQ HealthBeat reports. The Republican version would cost less than the Senate and House proposals and would increase the use of health savings accounts and small-business health insurance purchasing pools, according to the letter (Reichard, CQ HealthBeat, 7/24). The bill would limit eligibility to children in families with incomes at 200% of the federal poverty level or lower. Children who currently are enrolled in the program and are in families with incomes greater than that level would continue to receive coverage until income redistributions are made, according to aides familiar with the plan.

The bill would not allow states to seek federal waivers to provide coverage for nonpregnant adults and would bar states from disregarding portions of income when determining eligibility. The proposal would cost an estimated $9 billion over five years, according to CongressDaily (Johnson [2], CongressDaily, 7/25).

McConnell said other Republican senators were concerned about "the size of the plan that came out of the Finance Committee and what that may portend for the future in terms of an entire government takeover of American health care and, in essence, a single-payer system down the road" (Pear, New York Times, 7/25). The Republican bill "will likely not stop the bipartisan bill from getting the 60 votes needed to cut off a filibuster," although it will "attract support from many Republicans," according to CongressDaily (CongressDaily, 7/25).

Impact
SCHIP reauthorization and expansion "serves as a warm-up for a future debate on how best to revamp the entire U.S. health care system," provide coverage to the uninsured and "rein in climbing medical costs," the Wall Street Journal reports. The differences between House and Senate versions of the legislation put the two chambers "on a collision course with" each other and with President Bush, who has proposed providing an additional $5 billion over five years for SCHIP, the Journal reports.

The House bill "shows how difficult it can be to make any changes to health programs, as powerful industries lobby hard for payment increases or to ward off big cuts," according to the Journal. Sen. Chuck Grassley (R-Iowa) said that a $35 billion increase for the program is the limit for Republican lawmakers and that while Senate Democrats "might want something bigger, ... I think we went as far as we can as Republicans" (Lueck, Wall Street Journal, 7/25).

In addition, the combination of a "potentially difficult vote for some Democrats," the "prospect of a presidential veto and rough ride in the Senate" has led some "to question the point of moving forward" with the legislation, according to CongressDaily. Lawmakers must reauthorize the program by Sept. 30th or it will expire (Johnson, CongressDaily, 7/24).

Opinion Piece
"Reauthorizing the SCHIP state-federal partnership this fall is a good idea" but "[i]nviting more and richer adults into a children's welfare program is not," Rep. Joe Barton (R-Texas), ranking member of the House Energy and Commerce Committee, writes in a Washington Times opinion piece. Barton writes that "practical ways" to "fix health care" include "allowing small employers to consolidate their purchasing power so they can offer health insurance without losing their shirts"; making "health costs transparent and empower consumers to shop"; and reducing "the threat of ... gotcha malpractice suits" so that "health care inflation can cool" (Barton, Washington Times, 7/25).