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Health Policy Memo > Health Care Reform

Congress Passes Historic Health Care Reform Legislation

March 22, 2010

Yesterday, the U.S. House of Representatives passed the Senate version of the long anticipated, Health Care Reform bill. The controversial legislation, H.R. 3590, passed the House by a narrow margin, 219-212 and was opposed by all Republican Representatives and 34 Democrats. One hour later, the House passed their changes to the Senate’s version of the bill by passing H.R. 4872, which will now be sent to the Senate for approval. The overall reform bill, which has been approved by both Chambers, will be sent to President Obama today to be signed into law.

This legislation is the largest expansion to federal health care since the enactment of Medicare and Medicaid programs in the 1960’s. This $940 billion dollar plan is projected to extend insurance coverage to roughly 32 million additional Americans.

Below are some of the most significant House changes to Medicare provisions of the Senate’s reform bill:

Sec. 1101. Closing the Medicare prescription drug "donut hole".

The House edits would provide a $250 rebate for all Medicare Part D enrollees who enter the donut hole in 2010. The bill builds on pharmaceutical manufacturers' 50% discount on brand-name drugs beginning in 2011 to completely close the donut hole with 75% discounts on brand-name and generic drugs by 2020.

Sec. 1102. Medicare Advantage payments.

The legislation freezes Medicare Advantage payments in 2011. Beginning in 2012, this provision reduces Medicare Advantage benchmarks relative to current levels. Benchmarks will vary from 95% of Medicare spending in high-cost areas to 115% of Medicare spending in low-cost areas. The changes will be phased-in over 3, 5 or 7 years, depending on the level of payment reductions. This provision creates an incentive system to increase payments to high-quality plans by at least 5%. It also extends CMS authority to adjust risk scores in Medicare Advantage for observed differences in coding patterns relative to fee-for-service.

Sec. 1103. Savings from limits on MA plan administrative costs.

The bill ensures Medicare Advantage plans spend at least 85% of revenue on medical costs or activities that improve quality of care, rather than profit and overhead.

Sec. 1104. Disproportionate share hospital (DSH) payments.

The House edits would advance Medicare disproportionate share hospital cuts to begin in fiscal year 2014 but lowers the ten-year reduction by $3 billion.

Sec. 1105. Market basket updates.

The bill revises the hospital market basket reduction that is in addition to the productivity adjustment as follows: -0.3 in FY14 and -0.75 in FY17, FY18 and FY19. In addition, the House language removes the Senate provision that eliminates the additional market basket for hospitals based on coverage levels. Providers affected are inpatient hospitals, long-term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals and outpatient hospitals.

Sec. 1106. Physician ownership-referral.

The House language changes the date to December 31, 2010, after which physician ownership of hospitals to which they self refer is prohibited and provides a limited exception to the growth restrictions for grandfathered physician owned hospitals that treat the highest percentage of Medicaid patients in their county (and are not the sole hospital in a county).

Sec. 1107. Payment for Imaging Services.

One of the most significant changes by the House to the bill, for ASNC members, is the language regarding the equipment utilization rate for all advanced diagnostic imaging services. Under the Senate version of the bill, the rate would have gone from the current 50% up to 65% in 2011-12, 70% in 2013, and 75% in 2014. Under the new House reconciliation language, the utilization rate increase only applies to "expensive diagnostic imaging equipment" (defined by CMS in the 2010 Medicare Physician Fee Schedule as equipment priced over $1 million dollars). The new House provision raises the equipment utilization rate to 75% effective in 2011, but because the bill only applies the increase to equipment priced over $1 million dollars, nuclear cardiology is NOT INCLUDED within this provision. This means nuclear cardiologists will NOT INCUR ANY ADDITIONAL CUTS attributable to the rise in equipment utilization rates within greater health care reform. ASNC members should keep in mind, however, that other cardiology imaging modalities such as commuted tomography and magnetic resonance ARE AFFECTED by this provision and will see an increase in equipment utilization from 50 to 75% in 2011. This is a significant improvement over the equipment utilization language in the Medicare Physician Fee Schedule which attempted to raise the rate from 50 to 90% in 2011.

The Senate will take up the House changes to their health care reform bill in the coming weeks, however, it is expected that Republican’s in the Senate will attempt to use procedural hurdles to avoid the passage of the House edits (H.R. 4872).

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