Health Care 101: Understanding Health Care Reform

Health care reform activities will be at the forefront of the legislative agenda throughout the summer. Earlier this week, President Barack Obama met with key senators and called for a final health care reform bill to be presented to him for signature by October 1, 2009. While Congress is rapidly increasing its legislative activity to meet July timelines for floor action, reform proposals must be reviewed and scored by the Congressional Budget Office, which creates delays.

Five key congressional committees have jurisdiction over health care reform: 1) the Senate Finance Committee; 2) the Senate Health, Education, Labor and Pensions (HELP) Committee; 3) the House Energy and Commerce Committee; 4) the House Labor and Education Committee; and 5) the House Ways and Means Committee. To date, only the Senate Finance Committee has engaged in any serious activity related to health care reform, although the Senate HELP Committee is expected to release detailed plans shortly. The leaders of the Senate Finance Committee (which has jurisdiction over Medicare, Medicaid, and taxes) – Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa) – are spearheading health care reform efforts within Congress. The Finance Committee has three principal areas of focus: a) delivery systems; b) insurance coverage; and c) financing of health care. The committee has hosted a series of roundtable discussions on a number of issues. In the past month, the committee has published three separate options papers that provide broad outlines for reform:

  • Transforming the Health Care Delivery System: This options paper addresses general, big picture issues regarding Medicare payment reform. Highlights of the paper include:
    • Establishing a hospital value-based program that would move from a system of bonuses for reporting quality measures to paying for hospitals’ actual performance on these measures.
    • Improving the Physician Quality Reporting Initiative (PQRI).
    • Tying reimbursement for imaging to appropriateness criteria.
    • Establish quality reporting programs for inpatient rehabilitation and long-term care hospital providers.
    • Increasing the number of primary care physicians and general surgery physicians through bonuses (potentially at the cost of specialist bonuses) and reallocating GME slots.
    • Improving care management and care coordination through various bonuses, demonstration programs, etc.
    • Reducing hospital admissions through payment incentives.
    • Bundling acute and post-acute care to force more coordination and less duplication. 
    • Increasing the use of health IT.
    • Increasing comparative effectiveness research.
  • Expanding Health Care Coverage: This options paper deals with structural insurance coverage issues and the ways in which coverage can be extended to more patients:
    • Insurance Market Reforms
    • Health Insurance Exchange: All state-licensed private insurers in the non-group and small group markets, and the public health insurance option if applicable, operating nationally, regionally, statewide or locally would be required to participate in the Health Insurance Exchange. Private insurers would also be permitted to sell these policies directly to purchasers.
    • Making Coverage Affordable
    • Public Health Insurance Options
      • Medicare-like plan;
      • Third-party administrator; or
      • State-run public option
    • Role of Public Programs
    • Shared Responsibility
    • Prevention and Wellness
    • Long-Term Care Services and Supports
    • Options to Address Health Disparities
  • Financing Comprehensive Health Care Reform: This options paper focuses on increasing payment accuracy and reducing disparities in payment and spending amounts among different geographic regions across the country. The paper also addresses tax provisions that promote wellness and healthy lifestyle choices, as well as proposals President Obama included in his budget:
    • Options for financing health reform include:
      • Health system savings
      • Changes to current health care tax expenditures
      • Lifestyle tax proposals
      • Revenue provisions in the Administration’s budget
    • Ensuring appropriate Medicare/Medicaid payment. Options include:
      • Updating payment rates for home health services
      • Adjusting hospital DSH and GME payments
      • Reducing overpayments to Durable Medical Equipment (DME) suppliers
      • Adjusting reimbursement for high-growth, overvalued physician services (e.g., imaging, minor procedures)

Round One Rebid Announced for the DMEPOS Competitive Bidding Program

The Centers for Medicare & Medicaid Services (CMS) announced its next steps in the implementation of the Round One Rebid of the Medicare Competitive Bidding Program for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). CMS will now begin general “pre-bidding” supplier awareness and education efforts on key steps suppliers need to take now to be ready for registration and bidding including getting appropriate state licenses, updating Medicare enrollment files with the National Supplier Clearinghouse and getting accredited and bonded. CMS will also announce the detailed timeline for the program in the summer. The bidder registration period is expected to begin this summer before bidding opens in the fall. CMS has made a number of process improvements for the Round One Rebid, such as an upgraded on-line bid submission system, early bidder education and increased oversight of bidders that are new to product categories.

As part of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), Congress instituted a temporary delay of the competitive bidding program and called for certain changes in the program. The law required CMS to terminate contracts awarded in Round One and to conduct the competition for the Round One Rebid. Additionally, the new law established a financial document review process and a requirement for contract suppliers to report subcontract relationships. MIPPA also excluded certain DMEPOS items and areas from competitive bidding and provided an exemption to the program for hospitals that furnish certain types of DMEPOS items to their own patients. MIPPA did not fundamentally change the nature of the competitive bidding program as established by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) or the existing competitive bidding regulations finalized in 2007.

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OIG Permits Certain Payment Arrangements to On-Call Physicians Treating Uninsured Patients

On May 21, 2009, the Department of Health and Human Services Office of Inspector General (OIG) released a new advisory opinion in which it decided not to impose administrative sanctions against a 400-bed acute care hospital that proposed to compensate physicians for on-call services performed on behalf of the hospital's uninsured patients. The hospital had determined that physicians commonly viewed on-call coverage as an unwanted obligation, jeopardizing the hospital's ability to serve patients. Consequently, the hospital proposed a new on-call coverage policy and program which would allow participating physicians to submit claims to the hospital for payment for services rendered to certain "eligible patients" presenting to the hospital's Emergency Department. "Eligible patients" included those patients that have no sponsoring insurance plan and must eventually qualify for a state program.

The OIG determined that the hospital's proposed on-call program presented "a low risk of fraud and abuse" because:

  • The hospital certified that the payment amounts made to physicians were within the range of fair market value for services rendered, without regard to referrals or other business generated between the parties;
  • The payments under the proposed program are tailored to cover substantial, quantifiable services, all of which will be furnished to uninsured patients that present to the hospital's Emergency Department;
  • The circumstances giving rise to the proposed on-call program suggest that the hospital has legitimate rationales for revising its on-call coverage policy (i.e., hospital does not have needed specialists on-call for weeks, and dislike by medical staff of being on-call because of its disruptive nature, liability issues and lack of compensation);
  • The program would be offered uniformly to all physicians (other than hospital-based physicians and non-active staff physicians) and impose tangible responsibilities on them (e.g., physicians must respond within 30 minutes);
  • The method of scheduling on-call coverage would be governed by the hospital's medical staff bylaws, would be uniform within each department or specialty and would appear to be an equitable policy that would not be used to selectively reward the highest referrers; and
  • The program is an equitable mechanism for the hospital to compensate physicians who actually provide care that the hospital must furnish to be eligible for state funding. Thus, the program would promote an obvious public benefit in facilitating better emergency on-call and related uncompensated care physician services at the hospital.

This new OIG Advisory Opinion No. 09-05 can be found here.

Joint Statement Calls for Repeal of SGR

In a joint statement issued last week, approximately 60 medical organizations asked that the Sustainable Growth Rate (SGR) be eliminated and replaced with a system that reflects increases in physicians’ and other health professionals’ practice costs. The SGR is part of the formula that Medicare uses to set physician payment rates. It is tied to the Gross Domestic Product and not to inflation or cost-of-practice increases, and is intended to be a budgetary restraint on Medicare’s total expenditures. Among other things, the joint statement provides that if Congress and the Administration decide to adopt a transitional approach, it should:

  • Establish by law a transition pathway to complete replacement of the SGR by 2015.
  • Provide stability and predictability with positive, funded updates from 2010-2015 set by statute and linked to the Medicare Economic Index (MEI) for each year until a replacement takes effect.
  • Establish a realistic baseline for Medicare spending on physician services that eliminates the assumption that SGR-driven cuts will be implemented, greatly reducing the score assigned to legislation to repeal the SGR.
  • Use regulatory authority to remove physician-administered drugs from the SGR from 1996 on to help reduce the cost of repeal.
  • Use regulatory authority to adjust the Medicare Economic Index to include all costs of a current medical practice and use realistic productivity assumptions.

In addition, the organizations made the following recommendations:

  • Innovative payment system reforms that support physicians in the provision of high-quality care in a cost-effective manner need to be further developed and tested;
    Americans of all ages should be encouraged to adopt healthier lifestyles, choose cost-effective care and play an active role in their medical care;
  • Improvements are needed in Medicare’s physician quality reporting program;
  • Congress should support initiatives by organizations representing physicians and other health care professionals to bridge gaps in care, assure the appropriateness of services provided to Medicare beneficiaries and reduce inappropriate variation in health care utilization;
  • To completely redesign and redirect the financing and delivery system will require program officials to oversee a wide spectrum of tests and evaluations, develop tools to ensure that new systems are both fair and feasible, and prepare physicians and patients for the substantial changes that are envisioned.

HHS Releases $82 Million to Help Medicare Beneficiaries Access Their Benefits

The Department of Health and Human Services (HHS) released $82 million in grants to help older people, individuals with disabilities and their caregivers apply for special assistance through Medicare, and an additional $5 million for a national resource center to support these efforts. These grants, made possible by the MIPPA, will provide support at the state and community levels for organizations involved in providing assistance to people likely to be eligible for the Low-Income Subsidy program (LIS), the Medicare Savings Program (MSP) and the Medicare Part D Prescription Drug Program and in helping beneficiaries to apply for benefits. This initiative also includes special targeting efforts to rural areas of the country and to Native American elders.

The funding, which is jointly administered by HHS’ Administration on Aging and the Centers for Medicare & Medicaid Services, is being awarded to State Health Insurance Assistance Programs, State Agencies on Aging, Area Agencies on Aging, Aging and Disability Resource Centers, Native Americans Tribal Organizations and local communities to help seniors, caregivers and those with disabilities on Medicare.

The National Center for Benefits Outreach and Enrollment, administered by the National Council on Aging (NCOA), will help inform beneficiaries about benefits available under federal and state programs, utilize cost-effective strategies to find older individuals with the greatest economic need, coordinate state and local efforts by providing a best practice clearinghouse, data collection, training and technical assistance.

Source: Health Law Regulatory Update