Washington Outlook

December 18, 2009

Senate Democratic leadership targets December 24 for reform vote while still courting elusive votes

Senate Majority Leader Harry Reid's (D-NV) goal to hold a final vote on the Senate's healthcare reform bill before December 25 remains precariously on track, with Senate leadership and the White House aggressively pursuing commitment from the entire Democrat caucus whose votes they need to overcome a Republican filibuster and pass the bill. The latest Premier is hearing is that the Senate leadership plans to work through the weekend and hold a final vote late December 24, but the path is very narrow and the margin for error is zero for achieving the 60 votes needed to approve each procedural vote and then the final bill in the abridged timeframe.

The Democratic vote in question continues to be that of Ben Nelson (D-NE). Democrats are also courting Senator Olympia Snowe (R-ME), who is pressing Reid to wait until the new year to hold a vote.

The Senate must hold three cloture votes before it can move to a final vote on the bill. The manager's amendment that Reid is expected to file this weekend amends the Reid substitute, which in turn amends the underlying bill, the Patient Protection and Affordable Care Act (H.R. 3590). All three are pending simultaneously and are open to cloture motions. The Congressional Budget Office (CBO) is also expected to release on Saturday its score of Reid’s manager's amendment. Democratic leaders have indicated that early partial numbers that CBO has shared with them are positive.

Premier has continued pursuing changes to the Senate legislation to align more closely with its policy recommendations. In an Action Alert sent to member hospitals earlier this week, Premier called on its member hospitals to weigh in with their Senators on the dangerously-flawed readmissions and hospital-acquired conditions policies, and a number of other provisions related to accountable care organizations and the medical device tax.

While demonstrating flexibility on several key issues, the House, which has adjourned until the week of January 11, intends to negotiate the final bill with the Senate. This could be an informal pre-conference that would avoid the procedural steps necessary to execute a formal conference, but it would still involve a substantial compromise between the two chambers.

Premier applauds Senate freshmen for efforts to improve accountable care organization reform provision

Premier commended freshmen senators this week for including in their cost containment package of amendments to the Patient Protection and Affordable Care Act an amendment that would make improvements to the provision creating accountable care organizations (ACOs).

Specifically, the amendment would expand the scope of the ACO provision to allow the Centers for Medicare & Medicaid Services (CMS) to test a variety of payment models, rather than just restricting it to a single model, as the current Senate language does.

"Allowing CMS to test other innovative payment mechanisms to providing accountable, integrated care will expand the diversity of approaches to organizing ACOs and more quickly inform us on the best ways to improve quality while curbing the growth of healthcare spending," said Susan Devore, president and CEO of Premier, in a December 15 letter to the senators.

Throughout the healthcare reform debate, Premier has advocated for the establishment of ACOs, based on the promise they hold to align payment incentives with achieving higher quality patient care, improved efficiency, and greater care coordination and integration.

President signs omnibus appropriations bill funding HHS programs

President Barack Obama signed on December 16 a $446.8 billion omnibus spending measure (H.R. 3288) that combines six separate unfinished appropriations bills for fiscal year (FY) 2010 and funds ten federal agencies, including the Department of Health and Human Services (HHS). The bill contains approximately $163.5 billion for HHS, which exceeds both the FY 2009 amount of $155 billion and the president’s request of $160.7 billion. The continuing resolution that has kept the federal agencies and programs running expires on December 18. The House approved the bill on December 10, followed by the Senate on December 13. Appropriations levels include:

National Institutes of Health (NIH): $31 billion, which is $250 million above the president’s request and $692 million above FY 2009 funding levels.
Health Professions Workforce Shortage: $498 million, which is $30 million below the presidents request but $105 million above FY 2009 funding levels.
Nurse Training and Health Workforce: $244 million, which is $73 million above FY 2009 funding levels.
Healthcare-Associated Infections (HAIs): $190 million, which is $17 million above the president’s request and $28 million above FY 2009 funding levels
State Health Access Grants: $75 million, which matches the president’s request and FY 2009 funding levels.
Community Health Centers: $2.2 billion, which matches the president’s request and FY 2009 funding levels.
Public Health: $6.8 billion, which is $99 million above the president’s request and $128 million above FY 2009 funding levels.
Nursing Home and Medical Facilities Inspections: $347 million, which is $54 million above FY 2009 funding levels. It includes funding to enhance state inspections where HAIs are rising and to identify infection control problems.
Mental Health Services: $1 billion, which is $19 million above the president's request and $36 million above FY 2009 funding levels.
Substance Abuse Prevention and Treatment: $2.5 billion, which is $18.5 million above the president’s request and $61.5 million above FY 2009 funding levels.

Senate to vote on delaying physician payment cut, extension of COBRA expansion

The Senate is slated to vote Saturday on a measure to temporarily avert a 21.2 percent cut in Medicare payments scheduled for 2010, while the chamber continues to discuss a more permanent solution to address the sustainable growth rate (SGR) formula. A provision to delay the cut through February 28, 2010 was included in the fiscal year (FY) 2010 defense appropriations bill (H.R. 3326) that the House passed on December 16 and the Senate will likely vote on tomorrow. While the vote has been caught up in the floor strategy surrounding the healthcare reform debate, the appropriations bill is considered bipartisan and, once it reaches the floor, should pass handily.

The appropriations bill also includes a two-month extension of expanded unemployment and Consolidated Omnibus and Reconciliation Act (COBRA) benefits. The extension of federal COBRA subsidies were enacted as part of the American Recovery and Reinvestment Act (ARRA) and expired on December 1.

MedPAC considers recommendation of full hospital payment updates for 2011

The Medicare Payment Advisory Commission (MedPAC) last week considered recommendations to increase hospital inpatient and outpatient payments by the full market basket in 2011, concurrent with a quality incentive payment program, which is consistent with last year’s recommendations. Staff presenting the recommendations cited a negative 7.2 percent overall Medicare margin for hospitals in 2008 and a projected negative 5.9 percent overall Medicare margin in 2010.

Last week's discussed recommendations are intended to serve as a starting point and could change when MedPAC votes on these payment policies in January.

MedPAC Chairman Glenn Hackbarth prefaced the discussion by underscoring that the commission is charged with providing recommendations to Congress based on current law, so the recommendations laid out by staff do not take into consideration the ongoing healthcare reform debate. Provisions in the House and Senate healthcare reform bills would reduce hospital payment updates, starting in 2010. If these legislative provisions are enacted, any recommendations by MedPAC for a positive update would be precluded.

MedPAC also considered a recommendation, which is the same as last year’s, that the indirect medical education (IME) adjustment in 2011 be reduced by one percentage point to 4.5 percent per 10 percent increase in the residents-to-bed ratio, with the funds going to fund the quality incentive payment program.

Further, staff proposed repeating the recommendation of implementing a one percentage point reduction per year to inpatient base payments until further overpayments due to hospital documentation and coding improvement are fully prevented and all overpayments are fully recovered. MedPAC estimates that the adjustment to account for documentation and coding changes will total 5.9 percent, plus accrued interest. MedPAC expects that it would take eight years, at one percentage point reduction per year, before overpayments are fully recovered. A commissioner's suggestion that the timeframe in which the documentation and coding adjustments are made could be shortened met with considerable support from commissioners, signaling the recommendation ultimately voted on by MedPAC next month could incorporate that change. The Centers for Medicare & Medicaid Services in its inpatient rules has required that overpayments be recouped from hospitals over five years, but has not yet regulated how that would be accomplished.

Panel members also discussed the possibility of including a productivity offset to payments, but there was not sufficient support to alter the recommendation.

MedPAC also addresses draft recommendations for physician payments, post-acute care sites and ASCs

In addition to hospital payments, MedPAC discussed Medicare payments to physicians and post-acute care sites as part of its annual update deliberations. In short, the commission found that indicators of physician payment adequacy are generally favorable and proposed to update payments for physician services in 2011 by 1.0 percent (down slightly from the 1.1 percent update for 2010). Furthermore, the commission discussed the possibility of including a second recommendation, if only for purposes of reiteration – identical to their June 2008 and March 2009 recommendation - that would require Congress to establish a budget-neutral payment adjustment for primary care services billed under the Medicare physician fee schedule.

MedPAC also discussed payment adequacy for each of the post-acute care settings, including home health, hospice, skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs). Among other recommendations related to the post-acute care settings, MedPAC considered draft recommendations to eliminate the payment update in 2011 for SNFs, LTCHs and IRFs. For home health services, MedPAC discussed eliminating the market basket increase for 2011 and directing the Secretary to rebase rates for home health services to reflect the average cost of providing care. In contrast, the commission considered a draft recommendation to update hospice payments by the full market basket for 2011, less the commission’s adjustment for productivity growth.

Finally, the commission considered a draft recommendation for ambulatory surgical centers (ASCs) that would update payments by 0.6 percent--identical to the recommendation from a year ago. The draft recommendation again calls for CMS to collect cost and quality data from ASCs.

These recommendations are still subject to the commission's fuller debate over the coming months.

A full transcript of the meeting can be found on the MedPAC Web site.

HHS finalizes increased FMAP funding rates

In the December 8 Federal Register, HHS finalized the methodology for calculating the higher federal matching funding that was made available in the American Recovery and Reinvestment Act (ARRA) and provides the final calculation of the adjusted Federal Medical Assistance Percentage (FMAP) rates for the last two quarters of fiscal year 2009. The temporary FMAP rate increase was included in ARRA to provide fiscal relief to states and to protect and maintain State Medicaid and other assistance programs during the economic downturn. The increased FMAP rates apply to the period beginning in October 1, 2008 and ending December 31, 2010.

The House-passed healthcare reform bill (H.R. 3962) would extend the FMAP increases through June 2011 at a cost of $23.5 billion over 10 years.

Weekly legislative and regulatory round-up

The round-up for the week of December 12 - 18 is available here

The round-up for the week of December 5 - 11 is available here