Congressional discussions about health care reform legislation are entering their final stages. The Affordable Health Care for America Act, H.R. 3962, was introduced in the House of Representatives on Thursday, October 30, 2009, and is expected to be voted upon in November.  The Senate is in the process of merging bills that were passed by the Senate Finance Committee and the Senate Health Education Labor and Pensions (HELP) Committee.

 

Medicare plays an important role in these discussions.  Congress hopes to use Medicare to develop innovative delivery system reforms that will improve quality of care and slow the growth of health care costs.  Congress also would like to address issues pertaining to the solvency of the Medicare Part A trust fund as part of reform efforts.

 

This Alert focuses on those Medicare provisions in the legislation that are of greatest interest to beneficiaries and their advocates, as well as on some related Medicaid provisions.  It also briefly discusses provisions of the House legislation that would be effective immediately, before the 2013 effective date of the basic coverage expansions for the uninsured that are the  primary focus of the legislation.

 

Ensuring Access to Doctors

 

Opponents of health care reform have threatened Medicare beneficiaries that they would not be able to see their doctors if health care reform legislation is enacted.  The opposite is true.  Reforms are needed to ensure that physicians will continue to be reimbursed adequately enough to accept Medicare beneficiaries as patients. Under current rules, physicians are scheduled for a 21% reduction in their Medicare reimbursement starting in January 2010. 

 

Unfortunately, for political reasons, a "Doc Fix" designed to reform the physician payment system is not included in H.R. 3962 or its Senate counterpart.  A separate bill to redesign doctor payment, H.R. 3961, was introduced in the House of Representatives on the same day as HR 3962; the Senate is considering a modification that is more short-termed.  H.R. 3962 does, however, include other payment reforms that create incentives for primary care physicians and other practitioners to serve Medicare beneficiaries.

 

Reducing Overpayments to Medicare Advantage Plans

 

Both the House and the Senate address the 14% overpayment to Medicare Advantage (MA) plans.  The House bill would adopt the Medicare Payment Advisory Commission (MedPAC) recommendation to create a "level playing field" with traditional Medicare.  It also eliminates the fund set-aside for regional MA plans, and extends permanently the authority of the Secretary to adjust payments when MA plans claim their beneficiaries have higher health care needs than claims data establish.

 

The Senate bill would create a competitive bidding process for MA plans that would not achieve as much in savings, and that would still result in MA plans in some areas being paid more than traditional Medicare. Both bills include bonus payments for quality.  The Senate bill may include a provision to "grandfather" in extra benefits for plans in areas, such as Miami, that would otherwise see the most dramatic change in their compensation.

 

Closing the Part D Donut Hole and Other Reductions in Drug Costs

 

Under H.R. 3962, the phase-out of the Donut Hole would begin in 2010.  The bill would increase the initial coverage limit, the point at which people enter the Part D coverage gap, by $500 for next year.  The phase-out of the donut hole would be completed by 2019.  Meanwhile beneficiaries would be charged only 50% of the cost of certain drugs in the coverage gap.  Additionally, drug manufacturers must agree to Medicaid drug rebates for dual eligibles in order for their drugs to be covered by Part D beginning in 2010.  The House also provides for negotiation of drug prices by the Secretary of Health and Human Services, with Part D plan sponsors still having the opportunity to try to negotiate greater drug price savings for their plans.

 

The bill that passed the Senate Finance Committee only included a provision to reduce the cost of brand name drugs in the coverage gap.  It did not close the Donut Hole, require pricing rebates, or provide for negotiation of drug prices by the Secretary.  The final bill introduced in the Senate may do more to close the Donut Hole.

 

Preventive Services

 

Much of the focus on health care reform is on prevention of health conditions. The House bill eliminates co-payments and deductibles for preventive services that are covered by Medicare.  It is expected that the Senate bill will do the same.  The House bill also provides that all Medicare-covered vaccines will be covered under Medicare Part B.  This ensures access to vaccines for all beneficiaries and should make them available without any cost-sharing.

 

Provisions to Assist Beneficiaries with Limited Incomes and Resources

 

Neither the House bill nor the bill passed by the Senate Committees include all of the improvements that beneficiary advocates would have liked to see included in health care reform legislation.  The Senate bill so far includes only minor adjustments. 

 

H.R. 3962 increases the resource limit for the Part D Low Income Subsidy (LIS) and for Medicare Savings Programs to $17,000/ individual, $34,000/couple and provides for self-verification of income and resources.  It establishes a process for reimbursement to beneficiaries who are found retroactively eligible for the Part D Low Income Subsidy.  It eliminates Part D cost-sharing for dual eligible individuals who are in a Medicaid waiver program and who require nursing facility or intermediate care facility for the mentally retarded level of care. It provides for a different methodology for calculating the Part D plan benchmark for the Low Income Subsidy which will result in far fewer low income individuals having to be reassigned to new Benchmark plans each year. It gives the Secretary authority to assign low income beneficiaries to plans that meet their individual needs.  It also extends the Qualified Individual (QI) program, which helps pay for Part B premiums, for two years.

 

The House bill provides authority for the Internal Revenue Service to share data with the Social Security Administration that would allow the latter to better target its outreach efforts.  It also includes a technical correction to last year's Medicare legislation, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), concerning data transmission from the Social Security Administration to the states.

 

Coordination of Care

 

H.R. 3962 provides for a variety of demonstrations and pilot projects to move Medicare toward reimbursement for coordination of care for beneficiaries with chronic conditions.  These programs include:

• Transitional care services: Follow-up services designed to prevent avoidable hospital re-admissions, including pre-and post-discharge planning services, care coordination, medication orders, and translator/interpreter services;

• Accountable care organizations (ACOs):  An ACO is a group of physicians and other providers who use patient-centered processes and other best practices to coordinate care and avoid duplication of services.  Payment incentives are based on improved quality and reduced expenditures.  ACOs must agree not to deny, limit, condition coverage or the provision of care based on the health status of an eligible beneficiary.

• Medical home:  A medical home directs or provides access to primary care and all health care needs, taking responsibility for arranging for care and ensuring access.

• Independence at home:  Home-based primary care teams provide coordinated care to high need populations at home to reduce hospital admissions and re-admissions, to reduce duplicative testing, and to improve outcomes.

Medicare Commission

 

The House, the Senate, and President Obama all expressed interest in having some independent entity review Medicare payment mechanisms.  H.R. 3962 authorizes two studies by the Institute of Medicine (IOM).  One looks at geographic adjustment factors under Medicare, including issues concerning workforce recruitment and retention.  The other looks at geographic variation in health care spending and promoting high value health care, including variations in prices, health status, practice patterns, access and supply, and socio-economic factors.

 

The Senate Finance bill included a provision to establish a Medicare Commission with authority to review Medicare payment structures and make recommendations to effectuate cost-savings. The recommendations would become effective if Congress did not act within specified, and very fast, time periods.  The provision also included targeted caps on Medicare spending.  Although the provision said that the Commission could not make recommendations about beneficiary premiums and cost-sharing, a last-minute amendment would allow the Commission to make recommendations concerning Part D premiums.

 

Other Beneficiary Provisions

 

H.R. 3962 incorporates some additional consumer protections.  The Senate bill is also likely to include provisions designed to provide additional protection to beneficiaries.  The following are examples of some of these protections:

• Change the time frame for enrollment in Medicare Advantage and Part D plans;

• Limit cost-sharing in Medicare Advantage plans;

• Require MA plans to make available to beneficiaries information on their administrative costs (Medical Loss Ration);

• Allow payments by ADAP and Indian Health Service programs to count toward the Part D out-of-pocket limit;

• Calculate the Part D benchmark premium amount before application of MA plan subsidies;

• Extend the exception process for the Part B therapy caps;

• Create a demonstration project for reimbursement for culturally and linguistically appropriate services.

Medicaid Provisions Relevant to Medicare Beneficiaries

 

The House bill expands Medicaid coverage to non-disabled, childless adults under age 65 who are not eligible for Medicare and whose incomes are at or below 150% of the federal poverty level (FPL).  It also extends coverage to certain "traditional" Medicaid populations – children, parents and people under 65 with disabilities – with incomes at or below 150% FPL.  The latter expansion does not exclude people under 65 with Medicare, but none of the expansions includes people 65 and older.  There is no asset test for individuals covered by these expansions.  The Senate bill will likely expand Medicaid, as well, but less generously.

 

Medicare cost-sharing protections are added for people under 65 who, but for their income, meet the definition of a Qualified Medicare Beneficiary and whose incomes are less than 150% FPL.

 

Medicaid payments for primary care are increased over several years, with increases linked to Medicare payments.

 

Temporary increases in the federal matching payment to states that were made in the American Recovery and Reinvestment Act of 2009 are extended through June 2011.

 

The House bill requires the Secretary of Health and Human Services to establish an office or program within the Centers for Medicare & Medicaid Services to improve coordination between Medicare and Medicaid and protection for dual eligibles.  The Senate bill is likely to have a similar provision, though the functions and duties of such an office or program are described somewhat differently.

 

Provisions of the House Bill Effective Immediately or Shortly After Passage

 

Various private insurance market reforms are effective in 2010.  These include provisions establishing a temporary insurance program for those who have been uninsured for several months; requiring that insurers use 85% of premiums for benefits; prohibiting the rescission of policies except for instances of fraud; requiring annual review of premium increases by the Secretary of Health and Human Services; requiring insurers to allow for the continuation of coverage of children through age 26; shortening the time allowed for exclusion of coverage for pre-existing conditions; and prohibiting acts of domestic violence from being treated as pre-existing conditions. 

 

Additional provisions effective in 2010 require insurers to pay for reconstructive surgery for children with deformities; eliminate lifetime aggregate limits on benefits; prohibit discriminatory reductions in retiree health coverage compared with coverage for active employees; establish a temporary reinsurance program to reduce retiree (age 55-64) out-of-pocket costs for those in employment based plans; establish a grant program for small employers to create non-discriminatory wellness programs; extend COBRA eligibility until the Health Insurance Exchange established by the bill is up and running; expand existing grant programs to states to promote coverage for the uninsured prior to 2013 when the Exchange begins, and require the Secretary of HHS to adopt standards for transactions between providers and insurers.

  

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Combating Misinformation about Health Care Reform And Older People

 

The Center for Medicare Advocacy wants to ensure that older people and people with disabilities have accurate information on how any health care reform would affect Medicare and their access to health care.  Please check our web site, www.medicareadvocacy.org, and our blog, http://cmahealthpolicy.com, for updates.

 

The Center is a member of Seniors to Seniors, a coalition of groups dedicated to educating older people about health care reform.  The coalition's web site, http://seniorstoseniors.org, provides information directed to Medicare beneficiaries and their families.