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Senior Citizen Politics
Medicare Reform Bill Passed in Senate
Stops Physician Pay Cut Short-Term
Bill has a number of provisions impacting Medicare,
Medicaid and CHIP
Dec. 19, 2007 – Late yesterday the
Senate passed on a voice vote the Medicare reform legislation from the
Finance Committee. The summary of
Medicare provisions in the legislation being considered today in the
House was released just yesterday by the Senate Finance Committee. The lead provision,
which has garnered most of the public attention, addresses the 10
percent paycut for physicians that Medicare has approved for January.
This bill offers a temporary solution - a 0.5% increase but just through
June 30, 2008.
Chairman Max Baucus (D-Mont.) and Ranking Member
Chuck Grassley (R-Iowa) issued statements promising more Medicare reform
legislation in early 2008.
(Note: See a list of key
provisions in bill below this story. Also see below yesterday's report
from the KaiserNetwork.org on the committee actions and reactions.)
In addition to stopping the paycut for doctors, the
bill will, according to the committee news release, extend a number of
expiring provisions vital to seniors’ care under the program. In
particular, measures to ensure rural seniors’ access to care will be
The bill also extends authorization for the
Children’s Health Insurance Program (CHIP) through March 31, 2009, and
extends funding for Transitional Medicaid Assistance and special
diabetes programs. The bill is expected to cost approximately $6
billion, and the cost is fully offset with provisions noted below.
“This bill takes needed, immediate steps to shore
up Medicare by restoring physician payments and ensuring seniors’
continued access to health care in rural areas. But next year, Congress
must move boldly to improve Medicare for America’s seniors. There’s more
that Medicare can do for low-income and rural seniors,” said Baucus.
Senate Approves Medicare
Bill That Would Delay Physician Fee Cut, Extend SCHIP Through March 2009
[Dec 19, 2007]
The Senate on Tuesday by voice vote approved a
"bare-bones" Medicare bill (S
2499) that would delay for six months a 10% physician fee cut
and would extend SCHIP through March 2009, CQ Today reports. House
Majority Leader Steny Hoyer (D-Md.) said the House will take up the
measure on Wednesday.
The legislation would increase Medicare physician
fees by 0.5% for six months and would extend several programs that
provide higher Medicare reimbursement rates to rural health care
providers and hospital laboratories. However, the legislation does not
address future physician fee cuts, which means the 10% cut will go back
into effect after the six months without additional legislative action.
The measure also would extend SCHIP funding
through March 31, 2009. A summary distributed by the
Committee showed that the legislation would provide enough
funding for states to maintain their current enrollment levels
(Armstrong, CQ Today, 12/18). In addition, the bill would extend for six
months rural and low-income subsidies, as well as payments for
rehabilitative therapy under Medicare (Johnson, CongressDaily, 12/18).
The bill also would:
● Bar Medicare Advantage special needs plans
from expanding service areas through Dec. 31, 2009, and prevent new SNPs
from entering the program until that time;
● Place a "limited" moratorium on new
long-term acute-care hospitals and establish new facility and medical
review requirements to ensure patients receive appropriate levels of
care at the facilities;
● Extend a system in which physicians report
Extend through June 30, 2008, a Medicaid program
that helps low-income seniors and individuals pay their Medicare
● Extend the current abstinence-only education
program until June 30, 2008; and
● Extend through June 30, 2008, a transitional
medical assistance program that helps low-income individuals move from
welfare to work by maintaining health insurance for children (Carey/Reichard,
Congressional Budget Office on Tuesday
estimated that the measure would cost $5.3 billion over five years. The
costs would be offset by $1.5 billion in cuts from a "stabilization
fund" created under the Medicare prescription drug benefit to attract
preferred provider organization plans to underserved areas; $1.4 billion
in reduced payments to hospitals for inpatient rehabilitation services;
and $1 billion in reduced payments for drugs administered by physicians
rather than taken at home by beneficiaries. In addition, a data
reporting requirement for Medicare Secondary Payer should reduce fraud
and abuse, creating savings for Medicare. Under the program, Medicare
takes over payment liability from private insurers after they have paid
to treat certain conditions over a specific period of time (CQ Today,
The bill would maintain current payment system
for teaching hospitals. Republicans had proposed funding the measure by
eliminating some payments for medical education, but
House Ways and Means
Committee Chair Charles Rangel (D-N.Y.) opposed the idea
because he said the cuts would disproportionately hurt urban areas (CongressDaily,
CBO estimated that the physician fee patch would
cost $1.5 billion over five years and $6.4 billion over 10 years.
Extending SCHIP would cost $800 million over 10 years. According to CBO,
the legislation would save the government $100 million over five years
and would be cost neutral over 10 years (CQ Today, 12/18).
Future of SCHIP
Extending SCHIP until 2009 would be a "victory for Republicans,"
according to CQ Today. Democrats had aimed to extend the program for a
shorter period of time to make it a main issue during the 2008
presidential campaign. However, the "longer extension also offers a
chance to secure Republican cooperation in expanding the program to
cover more uninsured children," CQ Today reports (CQ Today, 12/18).
Finance Committee Chair Max Baucus (D-Mont.) said
that the extension does not limit when SCHIP can be discussed again,
saying, "We can still bring it up and try to do (children's health)
legislation before" funding expires (Reuters,
12/18). In addition, the legislation does not address a
CMS rule that prohibits states from expanding
SCHIP income eligibility limits to higher income levels if they have not
covered 95% of low-income children, so "any problems that develop as a
result of it will give lawmakers an excuse to revisit SCHIP in the
summer," CongressDaily reports (Johnson, CongressDaily, 12/19).
reports that supporters of SCHIP "might have to wait for the next
president and the 111th Congress to get a result." According to The
Hill, that "could be risky, since in 2009 SCHIP could well be subsumed
by much larger debate over the future of the U.S. health care system if
the focus of presidential candidates on health care issues holds steady"
(Young, The Hill, 12/19).
Association said that the six-month fix creates uncertainty
for Medicare beneficiaries and the physicians who serve them. AMA said
Congress should do away with the funding formula that created the cuts
altogether. In addition, AARP and other groups "described the Medicare
legislation that passed the Senate as woefully inadequate," hoping that
"Congress would substantially lower payments" to MA plan providers "to
pay for other programs that they wanted," the
Finance Committee ranking member Chuck Grassley
(R-Iowa) said, "This is a disappointment for many of us," adding, "The
purpose of moving forward with a six-month package now is to provide the
opportunity for the Finance Committee to address these priorities next
year" (Freking, AP/Houston Chronicle, 12/18).
Senate Budget Committee ranking member
Judd Gregg (R-N.H.) said of the Medicare physician fees, "There's a
geometric progression which makes it worse each year," adding, "So what
we ought to do is correct it permanently, take the hit and deal with it"
House Energy and
Commerce Committee ranking member Joe Barton (R-Texas) said,
"If the House extends SCHIP, the next logical move is to convene a
committee hearing and begin an honest, bipartisan exploration of how to
improve children's health insurance" (The Hill, 12/19)
“The CHIP extension in this bill will maintain
health coverage for more than six million children who currently have
it, but I will keep working to reach more low-income, uninsured American
children through that vital program. In 2008, it will also be time to
change Medicare in a smart and fiscally responsible way, serving both
the seniors who use Medicare and the taxpayers who fund this vital
“This bill includes essential policies for the
government to make sure doctors can continue to treat Medicare
beneficiaries and to preserve health care services in rural areas of the
country. It’s a six-month extension that serves as a stop-gap until
Congress can take care of the important Medicare business that got
backed up this fall,” Grassley said.
“The package we’re presenting today also tells
states what they need to know for the year ahead as they administer the
children’s health insurance programs that low income families with
children rely on. The longer extension of SCHIP will allow Congress to
enter the new year with a renewed focus on reauthorization while also
providing funding certainty to states."
A summary of the proposed provisions follows:
Summary of the Medicare, Medicaid and SCHIP Extension Act of 2007
I – Medicare
Increase in physician payment update; extension
of the physician quality reporting system. Replaces the scheduled
10.1% cut to the Medicare physician reimbursement rate in 2008 with a
0.5% increase through June 30, 2008. Extends the physician quality
reporting system. Revises the Physician Assistance and Quality
Extension of incentive payment program for
physician scarcity areas. Extends a provision that provides a 5%
bonus payment to physicians practicing in physician shortage areas
through June 30, 2008.
Extension of the floor on work geographic
adjustment. Extends for six months the work geographic index (GPCI)
floor of 1.0 through June 30, 2008.
Extension of treatment of certain physician
pathology services. Extends for six months the provision that allows
independent laboratories to continue to bill Medicare directly for the
technical component of certain physician pathology services provided to
hospitals as authorized by the Balanced Budget Act of 1997 through June
Extension of exceptions process for therapy
caps. Ensures Medicare beneficiaries access to therapy services
through June 30, 2008.
Extension of payment rule for brachytherapy;
extension to therapeutic radiopharmaceuticals. Extends the current
“charges to cost” methodology which provides a separate payment for
brachytherapy services through June 30, 2008. Includes therapeutic
radiopharmaceuticals in this provision.
Extension of reasonable costs payments for
certain clinical diagnostic laboratory tests in rural areas.
Provides reasonable cost reimbursement for clinical lab tests performed
by certain small rural hospitals as part of their outpatient services
through June 30, 2008.
Extension of authority of specialized Medicare
Advantage plans for special needs individuals. Extends the authority
of specialized plans to target enrollment to certain populations through
2009. Includes a moratorium on new plans and expanded service areas
through December 31, 2009.
Access to Medicare reasonable cost contract
plans. Extends section 1876 authority for cost contracts through
December 31, 2009.
Adjustment to the Medicare Advantage
stabilization fund. Removes $1.5 billion from the stabilization fund
for regional preferred provider organizations in 2012.
Medicare secondary payer reporting requirements.
Requires the submission of data by group health plans and liability
insurers to the Secretary of Health and Human Services that is necessary
to appropriately identify individuals for whom Medicare is the secondary
Payment for Part B drugs. Implements HHS OIG
recommendation to require CMS to adjust its Average Sales Price (ASP)
calculation to use volume-weighted ASPs based on actual sales volume.
Establishes an appropriate reimbursement rate for generic albuterol.
Payment rate for certain diagnostic laboratory
tests. Reimburses certain diabetes laboratory tests that are
approved for home use at the same rate as other glycated hemoglobin
tests beginning April 1, 2008.
Long-term care hospitals. Provides
regulatory relief for three years to ensure continued access to current
long-term care hospital services, while also imposing a limited
moratorium on the development of new long-term care facilities.
Establishes new facility and medical review requirements to ensure
patients are receiving appropriate levels of care at these facilities
and freezes the market basket update for the last quarter of rate year
2008. Requires the Secretary to conduct a study on long-term care
hospital facility and patient criteria.
Payments for inpatient rehabilitation facility
(IRF) services. Permanently freezes the inpatient rehabilitation
services compliance threshold at 60%, effective for cost reporting
periods starting July 1, 2006, and allows comorbid conditions to count
toward this threshold. Sets the market basket update factor at 0% from
April 1, 2008 through FY09. Requires the Secretary to study beneficiary
access to inpatient rehabilitation services and care at IRFs and to make
recommendations for classifying inpatient rehabilitation facility
hospitals and units.
Accommodation of physicians ordered to active
duty in the Armed Services.
Extends until June 30, 2008 a provision that
permits physicians in the armed services to engage in substitute billing
arrangements for longer than 60 days when they are ordered to active
Treatment of certain hospitals for payment under
Medicare. Extends until September 30, 2008, provisions that have
allowed certain hospitals to be eligible for wage index reclassification
that were otherwise unable to qualify for administrative wage index
Medicare enrollment assistance. Provides $15
million to State Health Insurance Assistance Programs and $5 million for
Area Agencies on Aging and Aging Disability Resource Centers for
beneficiary outreach and assistance.
II - Medicaid and SCHIP
Extension of qualifying individual (QI) program.
Provides assistance through Medicaid for low-income seniors and
individuals who need help meeting their Medicare premiums. Extends this
program through June 30, 2008 to continue serving current populations.
Extension of transitional medical assistance and
abstinence education programs. Extends the Transitional Medical Assistance program
(TMA) through June 30, 2008.
This program helps low-income individuals
transition from welfare to work by maintaining healthcare for their
children. Extends the current abstinence-only education program until
June 30, 2008.
Medicaid DSH extension. Extends authority for
disproportionate share hospital funding under section 1923 of the Social
Security Act for Tennessee and Hawaii through June 30, 2008.
Moratorium on certain payment restrictions. Imposes
a six-month delay on implementation of proposed administrative
regulations relating to school-based services and rehabilitation
Extending SCHIP funding through March 31, 2009.
Extends the State Children’s Health Insurance Program through March 31,
2009. Provides adequate funding to States for the purpose of maintaining
their current enrollment through that date.
Improving data collection. Provides an additional
$10 million to improve data collection on the uninsured by the Census
III - Other Provisions
Special diabetes program. Extends the Special
Diabetes Program through September 30, 2009 to fund type 1 diabetes
research and type 2 treatment and prevention programs for Native
Americans and Alaska Natives.
Medicare Payment Advisory Commission status.
Clarifies the Medicare Payment Advisory Commission’s status as an agency
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