The House of Representatives passed legislation in 2007 that would have reduced overpayments to Medicare Advantage plans and would have made significant improvements for beneficiaries.[1]  Similar efforts by the Senate, however, were unsuccessful, mostly for political reasons. The debate began again with the introduction by Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, of S. 3101, the Medicare Improvements for Patients and Providers Act.  The bill, which is co-sponsored by Senators Snowe (R-ME), Rockefeller (D-WV), and Smith (R-OR), is on a fast track.  Congressional action on a Medicare bill is needed by the end of June to address a reduction in Medicare payments to physicians that will otherwise go into effect on July 1, 2008.

Whether legislation to fix doctor payments (referred to as the "doctor fix") will pass through Congress and survive a presidential veto – and, significantly, whether such legislation will contain the beneficiary improvements contained in S.3101- remains unclear.  A vote is scheduled for 3 p.m. today, June 12, to invoke cloture on the bill, that is, to allow it to proceed without filibuster.

This Alert summarizes some of the beneficiary improvement provisions contained in S. 3101,[2]  and also discusses some of the provisions of S. 3118, the legislative alternative introduced by Senator Charles Grassley (R-IA), ranking member of the Senate Finance Committee.

SUMMARY OF S. 3101

Provisions Affecting Individuals with Low Incomes

• Extends the Qualified Individual (QI) program, which is set to expire on June 30, through December 31, 2009, and raises the funding cap.

• Increases the amount of allowable resources for the Medicare Savings Programs (MSP) to the amount specified for the full Part D low-income subsidy (LIS), beginning January 2010, from $4,000 to $7,790 for individuals, and from $6,000 to $12,440 for couples and indexes the amounts going forward.

• Exempts the cash surrender value of life insurance policies and in-kind support and maintenance (ISM, e.g., assistance provided by a family member or church) from Medicare prescription drug LIS determinations.

• Enlists the Social Security Administration (SSA) to help low-income beneficiaries apply for the MSPs, by providing MSP applications to individuals applying for Medicare benefits, providing assistance in completing applications, and coordinating with States.

• Removes the requirement that States collect from the estates of deceased Medicaid beneficiaries the Medicare cost sharing benefits that were paid while the deceased was enrolled in the MSPs.

• Codifies current guidance allowing for a special enrollment period for LIS eligible individuals to select a Part D plan and eliminating the late enrollment for LIS eligibles.

• Provides for judicial review of a denial by SSA of an LIS application.

• Requires the MSP application form to be translated into the 10 non-English languages most frequently used by Medicare beneficiaries.

• Provides additional funding for State Health Insurance Assistance Programs (SHIPs) and Area Agencies on Aging to help with LIS enrollment and to navigate the Medicare program.

Provisions Affecting Medicare Parts A and B

• Extends the exceptions process for therapy caps through December 31, 2009.

• Authorizes the Secretary of Health and Human Services (the Secretary) to use the Medicare National Coverage Determination process to cover new preventive services that are recommended by the U.S. Preventive Services Task Force.

• Extends coverage for the "Welcome to Medicare Visit" from the initial 6 months of Part B eligibility to 1 year and waives the deductible.

• Phases in over a 6 year period a reduction in the coinsurance for mental health services from 50% to 20%.

• Contains provisions improving access to and payment for rural providers.

• Authorizes the Secretary to develop alternative methods of payment for beneficiaries who participate in clinical trials to enable participation of Medicare beneficiaries in randomized controlled trials.

Provisions Affecting Medicare Part C (Medicare Advantage)

• Extends the authority for special needs plans (SNPs) until December 31, 2010.

• Revises definitions concerning enrollment of special populations, care management requirements, and quality reporting standards for SNPs.

• Limits cost sharing for people dually eligible for Medicare and Medicaid who are enrolled in a SNP to cost-sharing under Medicaid, if any.

• Requires private fee-for-service (PFFS) plans to develop networks of providers so that plans cannot "deem" a hospital or provider as part of the plan's network without negotiating a contract.  The elimination of deeming applies to employer plans starting in 2011, and to individual plans starting in 2011 in markets where 2 or more network-based plans operate.

• Requires PFFS plans and regional preferred provider organizations (PPOs) to have the same quality improvement programs as local PPOs, effective January 1, 2010.

• Phases out the double payment made to Medicare Advantage plans for costs to teaching hospitals (indirect medical education, or IME).  Teaching hospitals are paid directly for their extra costs, and this payment is reflected in base payment rates to health plans.

• Removes $1.8 billion from the Medicare Advantage stabilization fund for regional PPOs in 2012.

Provisions Affecting Medicare Part D

• Permits Medicare prescription drug plans to cover barbiturates (for certain conditions) and benzodiazepines, beginning January 2012.

• Codifies current guidance relating to coverage of the "protected classes" of drugs.

• Provides for prompt payment of claims submitted by pharmacies.

Provisions Affecting Marketing of Medicare Part C And Part D Plans

• Prohibits certain sales activities of Medicare Advantage and Part D drug plans, including door-to-door sales, cold calling, free meals, and cross selling of non health-related products, effective for the 2010 plan year;

• Requires the Secretary to limit co-branding, gifts and commissions;

• Requires plans to abide by state appointment laws affecting agents and brokers.

Other Medicare Improvements

• Directs the Secretary to eliminate certain Medigap plans made redundant by Medicare Part D; modernize benefits under current Medigap plans in accordance with recommendations from the National Association of Insurance Commissioners (NAIC); and adds two new plans with new cost-sharing structures.

• Provides for a report to Congress on effective approaches for reducing disparities in health services and performance by race, ethnicity and gender.

THE ALTERNATIVE APPROACH – S. 3118

Senator Grassley introduced an alternative legislative approach, S. 3118, the Preserving Access to Medicare Act of 2008, on June 11, 2008.  While the Grassley bill addresses the problem of the reduction in payment to physicians, it provides virtually no assistance to beneficiaries, other than extension of the exception for therapy caps and provisions concerning marketing of Part C and Part D plans.  Of most concern to beneficiary advocates:

• The Grassley bill contains no low-income improvements, other than to extend the QI program for 15 months, 3 months less than the 18 month extension in S. 3101. 

• The Grassley bill does not improve access to preventive benefits.

• The Grassley bill does not reduce cost sharing for mental health services.

• The Grassley bill does not place limitations on PFFS plans.

CONCLUSION

Once again protections for Medicare beneficiaries will be at the center of the debate on the action Congress should take in legislation that retracts the pending cuts to Medicare physician payments.  Senate Bill 3101, in addition to addressing the doctor payment problem, includes important beneficiary improvements and takes steps to reign in overpayments to Medicare Advantage plans. The Grassley alternative ignores the needs of beneficiaries, including individuals with limited incomes, and ignores the problems created by PFFS and MA plans.

If Senate Bill 3101 can survive the politics surrounding any legislation that makes changes to Medicare Advantage plans, and the politics surrounding legislation that includes low-income beneficiary protections, Medicare beneficiaries will gain some real improvements in their access to care.

Check your news sources to learn the outcome of today's important vote.