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Washington Report: The 110 th Congress and Health Care Reform

Missouri Chapter Scientific Meeting Rich Trachtman Director, Legislative Affairs American College of Physicians Washington, DC September 29, 2007. Washington Report: The 110 th Congress and Health Care Reform . Take home messages.

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Washington Report: The 110 th Congress and Health Care Reform

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  1. Missouri Chapter Scientific Meeting Rich Trachtman Director, Legislative Affairs American College of Physicians Washington, DC September 29, 2007 Washington Report:The 110th Congress and Health Care Reform

  2. Take home messages • SCHIP re-authorization and the federal budget are pre-cursors to 2008 election debate over role of government in health care • Medicare physician payment reform has become inextricably linked to SCHIP debate • House and Senate have very different approaches to SCHIP and Medicare payment reform • ACP’s priorities are reflected in House-passed SCHIP reauthorization bill

  3. The 2008 federal budget: Medicare • The President’s budget for Medicare program would: • Reduce payment rates for a broad range of services covered by Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B), • Shift some spending to private insurers, and increase premiums paid by certain beneficiaries. • In CBO’s estimation, those provisions would reduce net Medicare spending by $232 billion (or 4.3 percent) over the 2008–2017 period. • Bush budget does not include any money to halt 9.9% Medicare physician payment cut in 2008 CBO, ESTIMATES OF THE PRESIDENT’S BUDGET FOR FISCAL YEAR 2008, March 2007

  4. The 2008 federal budget: Medicaid and SCHIP • The President’s proposals for SCHIP and Medicaid would increase spending for the former by $12 billion and lower spending for the latter by a total of $49 billion over the 2008–2017 period. • SCHIP would be reauthorized for five years but changes would be made: • Funding would be increased by $277 million in 2009 and by $1.5 billion for each year from 2010 to 2012; • the time that states could use SCHIP funds would be shortened from three years to one year before those funds were reallocated to other states; • By reducing the extent to which states could use Medicaid funds after exhausting their SCHIP funds, the proposal also would decrease Medicaid spending by $8 billion over the 2008–2017 period. CBO, ESTIMATES OF THE PRESIDENT’S BUDGET FOR FISCAL YEAR 2008, March 2007

  5. The 2008 federal budget: Medicaid and SCHIP • A total of 7.4 million people were enrolled in SCHIP at some point during 2006. Under the baseline funding level of $5 billion per year, CBO estimates that the program’s enrollment would remain at 7.4 million in 2007 and then decline to 5.6 million by 2012. • Under the President’s budget, enrollment would reach 8.3 million people in 2007 and then fall to 6.7 million by 2012. CBO, ESTIMATES OF THE PRESIDENT’S BUDGET FOR FISCAL YEAR 2008, March 2007

  6. House and Senate Budget Resolution • The $2.9 trillion plan emphasizes balancing the budget in five years without big spending cuts and by assuming revenue gains from allowing President Bush’s signature tax cuts to expire. Specifically, the conference agreement: • Assumes $54.965 billion for Function 550 discretionary health spending. • Function 550 covers all health spending except Medicare, military health and veterans’ health care: Medicaid, the State Children’s Health Insurance Programs (SCHIP), the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), the Health Resources Services Administration, the National Institutes of Health (NIH) and health benefits for federal retirees.

  7. House and Senate Budget Resolution • The $54.965 billion included in the legislation for Function 550 is $2.9 billion over FY 2005 levels and $3 billion above President Bush’s budget request. • It also sets overall non-defense discretionary spending at $350 billion which is $23 billion above the final FY 2007 level and $21 billion above the President's request. OVERVIEW OF FY 2008 BUDGET CONFERENCE AGREEMENT, May 16, 2007

  8. ACP’s Discretionary Spending Budget Priorities • ACP is asking lawmakers to support the following programs in FY 2008 Appropriations: • $350 million for the Agency for Health care Research and Quality with sufficient funding for investigator-initiated research; • $550 million for health professions programs under Title VII and VIII; • $480 million for the VA medical and prosthetics research program;

  9. ACP’s Discretionary Spending Budget Priorities • ACP is asking lawmakers to support the following programs in FY 2008 Appropriations: • Support funding in both House and Senate Appropriations bills to support the Office of the National Coordinator for Health Information Technology (ONCHIT); and • Increased funding for HIT research in the Agency for Health care Research and Quality.

  10. The Debate over SCHIP • SCHIP expires Sept. 30 • House bill would have provided $50 billion for SCHIP and Medicare, offset by tobacco tax increase and cuts in payments to Medicare Advantage plans. • Senate bill provides $35 billion to SCHIP, offset by tobacco tax increase; does not include a Medicare physician payment fix. • White House opposesboth chamber’s proposals and is threatening a veto calling funding levels for SCHIP a pathway to government-run health care

  11. Physician Payment Fix (House bill) • Replaces 9.9% SGR cut in 2008 with 0.5% increase • Replaces estimated cut of 5% in 2009 with 0.5% increase • Increases in 2008 and 2009 are fully paid for at a cost of $30 billion over five years (instead of “digging the hole deeper” as was done by past Congresses) • Takes drugs and “incident to” services out of expenditure targets as recommended by ACP • Requires that CMS include new coverage decisions as change in “law and regulation” in calculating targets

  12. Physician Payment Fix (House bill) • SGR is repealed effective 1/1/2010 • Replaces SGR with category-specific expenditure targets: • Primary and preventive services • Other evaluation and management services • Imaging • Other minor procedures • Major procedures (10 and 90 day global fees) • Anesthesiology • Primary and preventive category would have a target of per capita GDP plus 3 percent; all other targets would be limited to per capita GDP

  13. Physician Payment Fix (House bill) • To keep CBO “score” low, the bill would require that beginning in 2010, each category of services must recoup its proportionate share of the $54 billion SGR “overhang” (shortfall created by past Congresses’ decisions to pay for increase above SGR levels with deeper cuts in later years) • Because primary and preventive care has a higher spending target (GDP plus 3), it would pay off its “overhang” more rapidly than other categories • But all categories, including primary care, would be facing annual cuts of 5 percent per year beginning in 2010 through at least 2015

  14. Physician Payment Fix (House bill) • Creates expert panel to identify misvalued services under RBRVS for review by the RVS Update Committee (RUC) • Five year review of services whose volume, length of stay, other factors suggest that the work RVUs may have changed • ACP supports proposals to review potentially misvalued services • HHS also given authority to reduce work RVUs for services whose volume grows by more than 10% in a given year if this leads to reduced physician work

  15. Physician Payment Fix (House bill) • Requires HHS study and report on ways to “bundle” payments for physician services • Authorizes program to provide physicians with comparative information on practice patterns and utilization compared to peers (confidential reporting) • Repeals the Physicians Quality Reporting Initiative (no congressional funding for P4P—although administration is proposing to use small pool of existing funds provided by 109th Congress to continue the program)

  16. Physician Payment Fix (House bill) • Bill includes provisions to replace the Medicare Medical Home demo enacted by 109th Congress with an expanded PCMH demo: • Up to 500 practices nationwide; 100 with fully functional EMRs, others with less advanced HIT; • Increase funding for the demo from $100 million to $500 million; • Direct HHS to create a care coordination payment that reflects both physician work and costs of HIT systems • Targeted to 4 full-time physicians • 3-year demo beginning no later than October 2009

  17. Medicaid and SCHIP Medical Home Demo • ACP and the Patient-Centered Primary Care Collaborative are pushing legislation to: • Provide state Medicaid and SCHIP programs with transformation grants to organize care around a PCMH • States would designate an independent entity to recognize practices as being qualified • States would pay physicians a care coordination fee

  18. House-Senate Negotiation • The House and Senate bills were significantly different • House bill cost $50 billion with increase an tobacco tax ($0.45) and cuts in MA to pay for it (225-204) • SCHIP reauthorization and Medicare improvements • Senate bill costs $35 billion with an increase in tobacco tax ($0.61) to pay for it (68-31) • SCHIP reauthorization only

  19. House-Senate Agreement • The House agreed to the Senate bill’s funding level for the SCHIP reauthorization • The House agreed to drop its Medicare provisions • The House-Senate agreement has now been passed by both houses of Congress • The bill has now been cleared for presidential action • A veto has been promised and is expected

  20. ACP Reaction • The College expressed concern to Congress over Medicare provisions being dropped from the SCHIP bill • Urged prompt action to preserve and improve access for America's seniors • ACP endorsed the House-Senate agreement on SCHIP reauthorization • But stressed the importance of Congress immediately resuming movement toward enactment of needed Medicare legislation

  21. ACP position • ACP supports the House package on physician payment reforms • Senate leadership has promised not to let the SGR cut go into effect, but has not yet proposed a plan or vehicle • On physician payments, ACP strongly supports the following House proposals: • positive payment updates (while urging Congress to provide more than 0.5%) that are fully paid for; • policies that designed to provide higher payments for primary care and prevention;

  22. ACP position • On physician payments, ACP strongly supports the following House proposals: • processes to address misvalued RVUs; • providing physician with comparative data on practice patterns; • taking drugs out of the target(s); • including new coverage decisions in target as change in law and regulation; • expanding the Medicare Medical Home demonstration

  23. ACP position • Will communicate that cutting payments for each category beginning in 2010 to recoup $54 billion is untenable, will lead to deep cuts for all services (including primary care) and will need to be changed • Express caution about moving to separate targets and opportunity to work with Congress on alternatives before they go into effect • Express continued support for funding a better PQRI program with additional dollars

  24. The bottom-line • The House bill’s Medicare provisions are far better than current law (9.9% cut next year, 40% cut over next five years) and will give us time to work on better alternatives before the “overhang” and separate targets go into effect in 2010 • ACP’s priorities are being heard: preferential targets for primary care, interest in new medical home demo for Medicaid/SCHIP and an expanded one for Medicare

  25. The bottom-line • ACP will need to do the “heavy lifting” to help get the key House Medicare provisions (including the physician payment fix and medical home demo) accepted by the Senate • The debate over SCHIP is the start of the broader election debate over the role of government versus private insurance in providing health care coverage

  26. Issues for Remainder of 2007 and Beyond • Patient-Centered Medical Home • Sen. Durbin • Rep. Kaptur – H.R. 2351, HealthCARE Act • Sen. Lincoln, Rep. Green • Health Information Technology • Rep. Gonzalez (H.R. 1952) • Health Care Access • Rep. Kaptur – H.R. 2351, HealthCARE Act • Sen. Lieberman – HealthCARE Act • Sen. Bingaman, Rep. Baldwin - Health Partnership • Medical Liability

  27. Questions Rich Trachtman Director, Legislative Affairs rtrachtman@acponline.org 1-800- 338-2746 ext. 4538

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