Health Policy Memo > Health Care Reform
Summary of Final Health Care Reform Legislation
March 29, 2010
Last Thursday, Congress brought the health care reform debate to a close with the passage of the Health Care and Education Affordability Reconciliation Act (H.R. 4872). The Reconciliation Act will go to President Obama to be signed into law. Some key areas of the final legislation include:
Equipment Utlization Rate
The passage of this legislation marks a victory for ASNC members as an effort to remove a favorable equipment utilization provision from the bill was defeated by effective grassroots opposition. The final legislation sets the equipment utilization rate at 75 percent for all advanced diagnostic imaging equipment with an acquisition cost of more than $1 million beginning in 2011. This provision does not apply to nuclear cardiology due to the $1 million threshold. Under this definition, ASNC members will avoid an additional 7 to 10 percent cut to reimbursement.
Changes to Medicare Payment
- 10 percent incentive payments for primary care physicians
All physicians in family medicine, general internal medicine, geriatrics and pediatrics whose Medicare charges for office, nursing facility and home visits make up at least 60 percent of their total Medicare claims will be eligible for a 10 percent bonus payment for these services from 2011-2016.
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10 percent incentive payments for general surgeons performing major surgery in areas with health professional shortages.
Any general surgeon who performs a major procedures (with a 10 or 90 day global service period) in an area with health professional shortages, will be eligible for a 10 percent bonus payment for these services from 2011-2016.
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Geographic payment differentials
The national average floor on Medicare's geographic payment adjustment (GPCI) for physician work was reestablished in 2010 and 2011. This requires Medicare to make a separate adjustment for the practice expense portion of physician payments. These adjustments will benefit physicians in rural and low cost areas. Beginning in 2011, this will increase practice expense GPCI for physicians in North Dakota, Montana, South Dakota, Utah and Wyoming, an increase which brings those states to the national average. Physicians in 42 states will benefit from the two practice expense adjustments.
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.
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.
Savings from Limits on Medicare Advantage 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.
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.
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.
Medical Liability Protection and Grants
The Secretary of Health and Human Services (HHS) is authorized to award five year demonstration grants to states to assist them in the development and implementation of medical liability reform initiatives, such as health courts and early offer programs, beginning in 2011. Protections under the Federal Tort Claims Act will be extended to officers, governing board members, employees and contractors of free clinics.
Establishment of an Independent Payment Advisory Board
A new Independent Payment Advisory Board will determine Medicare payment updates for physicians under a spending target system. The goal of this Board will be to reduce the per capita growth rate of Medicare spending. For years where the per capita growth rate exceeds projected growth rates, the Board will submit proposals containing recommendations to reduce the Medicare per capita growth rate. The Secretary of HHS will be required to implement these proposals from the IPAB unless Congressional action is taken to prevent implementation.
