As part of the health care reform legislation, and in an effort to help restrain growth in Medicare expenditures, Congress has created the Independent Payment Advisory Board, which has the authority to develop proposals that will become law if Congress fails to enact alternative proposals.
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The Facts
President Obama is reportedly poised to nominate Don Berwick, M.D., M.P.P., to head the Centers for Medicare & Medicaid Services (CMS). Since 2006, when Dr. Mark McClellan left, CMS has been without a permanent administrator.
Berwick is the current president and CEO of the Institute for Healthcare Improvement, a Cambridge, Massachusetts, organization that seeks to improve health care by "building the will for change, cultivating promising concepts for improving patient care, and helping health care systems put those ideas into action." In its work, the institute seeks to "accelerate the measurable and continual progress of health care systems." For more information about the institute, visit http://www.ihi.org/ihi/about/. Berwick is also a clinical professor of pediatrics at Harvard Medical School and a professor of health care policy at the Harvard School of Public Health. Berwick served as vice-chair of the U.S. Preventive Services Task Force, and chair of the National Advisory Council of the Agency for Healthcare Research and Quality. He also served two terms on the Institute of Medicine’s governing council.
Berwick would have the difficult job of managing and improving Medicare, Medicaid and the Children's Health Insurance Program, while simultaneously implementing much of the recently enacted health reform legislation. While Medicare currently covers 46 million Americans, Medicaid currently covers 43.5 million Americans and is slated to expand to cover an additional 16 million individuals through expanded eligibility in health reform legislation. However, in light of Berwick’s vast experience in the area of health quality improvement, he seems well-positioned to lead CMS as the agency positions itself to increasingly focus on paying for value as opposed to volume.
What’s at Stake
As the new head of the largest medical payer in the nation, Berwick’s leadership and decisions would significantly affect almost everyone in the health care sector. With the enactment of health reform legislation, implementation is the primary focus of the Obama administration. Berwick would have a vital role in determining how this reform is rolled out and ensuring that this reform meets U.S. Department of Health and Human Services Secretary Kathleen Sebelius’s goal of HHS becoming “the face of competent government — the face of a help desk that can really respond to personal issues and questions.”
Steps to Consider
The post of CMS administrator requires U.S. Senate confirmation, a process that may reignite the deep political and philosophical divisions about the newly passed health reform legislation. Thus, all in the health care sector should monitor the nomination and Senate confirmation process.
The Facts
The Senate health reform bill would establish a 15-member Independent Payment Advisory Board (IPAB) with significant authority with respect to Medicare payment rates. Beginning in 2014, in any year in which the Medicare per capita growth rate exceeded a target growth rate, the IPAB would be required to recommend Medicare spending reductions. The recommendations would become law unless Congress passed an alternative proposal that achieved the same level of budgetary savings. Subject to some limitations—hospitals, for example, would be exempt until 2020—the IPAB could recommend spending reductions affecting Medicare providers and suppliers, as well as Medicare Advantage and Prescription Drug Plans. In years in which the IPAB would not be required to make recommendations, it would be required to submit an advisory report. Every two years, the IPAB would make recommendations on slowing the growth of private health expenditures.
The proposed IPAB has drawn significant criticism from advocacy groups, and a similar provision is not included in the House bill. However, the Senate’s IPAB proposal has strong support from President Obama and is expected to emerge in some form in any final comprehensive health reform package.
What’s at Stake
Medicare providers and suppliers could be subject to significant payment cuts if the proposed IPAB is enacted and overall Medicare spending continues to increase at its current rate. A group of providers and advocacy groups, including the American Hospital Association, joined in a January 11, 2010, letter opposing the IPAB, noting that it would not be accountable to anyone but the president (who appoints its members). Shifting payment authority from Congress to an independent commission would be a significant change, and is viewed as one of the most meaningful measures in health reform legislation with respect to bending the cost curve in health spending.
Steps to Consider
The Facts
Both the recently passed Senate and House health care reform bills contain provisions that affect retiree health benefits. Both bills remove the tax exemption for Medicare Part D subsidies received by employers who provide retiree prescription drug coverage. In addition, the House bill prohibits employers from changing a retiree’s available benefits once the individual has retired, and the Senate bill contains a 40 percent excise tax on retiree health benefits that exceed certain thresholds ($9,850 for single coverage and $26,000 for family coverage). Both bills decrease the Medicare prescription drug coverage gap by $500 (with the House bill completely eliminating the gap by 2019) and provide a 50 percent discount on brand-name drugs to retirees affected by the coverage gap.
What’s at Stake
These provisions have the potential to decrease employer-provided retiree health and prescription drug benefits. Employers will find it much more expensive to provide these benefits without the tax exemption for the prescription drug coverage subsidy and with the threat of a 40 percent excise tax on health coverage beyond the stated threshold. This extra cost may serve as a deterrent to providing such benefits. In addition, the inability to alter the benefits offered to retirees provides an incentive to decrease or eliminate retiree benefits so employers are not obligated to provide such coverage indefinitely. Further, the reduction in the Medicare coverage gap and discount on drugs will influence employers to eliminate prescription drug coverage because these increases bring the Medicare drug benefit to a level closer to that of employer-provided coverage.
Steps to Consider
The Facts
On November 18, 2009, Senate Majority Leader Harry Reid of Nevada put forth the Democrats’ health reform plan, the Patient Protection and Affordable Care Act. The more than 2,000 page bill was crafted by merging, tweaking and augmenting health reform legislation approved by the Senate Finance Committee in October and the Senate Committee on Health, Education, Labor and Pensions in July. Set forth below are some of the bill’s principal provisions.
What’s at Stake
Given the sweeping nature of the bill, every aspect of health care in the United States would be affected.
Steps to Consider
The Facts
The first draft of the House Democrats’ health care reform legislation published June 19, 2009, portends the government’s continued focus on Medicare program integrity, fraud and abuse reform, and transparency in industry-physician relationships. The bill includes several provisions that propose to enhance existing program penalties for fraud and abuse. Further, the bill explicitly provides that existing authority relating to program integrity and the authority to prevent and prosecute fraud, waste and abuse will apply equally to the public health insurance option. Other provisions of the bill propose to strengthen significantly compliance requirements for Medicare program participation.
Proposals for increasing existing penalties include enhanced penalties for:
Proposals aimed at enhancing program and provider protections include:
What’s at Stake
The provisions in the proposed bill underscore the federal government’s objective to fund some of the cost of health care reform through increased program penalties, reducing fraud, waste and abuse and enhancing payment protections. Physicians, providers and suppliers may see increased enforcement activities bolstered by greater scrutiny of program activities.
Steps to Consider
The Facts
On June 19, 2009, House Democrats unveiled their first draft of health care reform legislation. Despite exceeding 850 pages, the draft bill is still a work-in-progress. Many of the anticipated Medicare program payment reductions and revisions are absent from this draft, but providers should not draw too much comfort from that. President Obama has called for more than $600 billion in savings from Medicare, and those savings will be required to pay for the massive overhaul. Providers should still expect significant savings provisions to be added later.
In the meantime, the bill still includes considerable change, including:
What’s at Stake
The proposed bill foreshadows a new reimbursement paradigm that focuses on accountability for quality, cost savings, coordinated care, and increased scrutiny to preclude conflicts of interest and other skewed incentives. Health care service providers will face new systems, obligations and incentives that will dramatically alter how providers furnish services and interact with Medicare and its beneficiaries.
Steps to Consider
The Facts
President Obama is driving an extremely ambitious effort to achieve comprehensive health reform by October 2009. House and Senate leaders are responding with an aggressive timeline for developing legislation to be on the president’s desk this fall.
Heeding lessons learned from the failed Clinton health reform efforts, the president has until now resisted imposing his views directly on Congress. Now visibly engaged, the president enunciated his policy preferences in a June 2, 2009, letter to Congress:
The president also indicated a willingness to consider individual and employer mandates as well as an enhanced role for the Medicare Payment Advisory Commission. Click here for a copy of the president’s letter.
Senate Finance Committee senior Republican Charles Grassley (R-IA) and eight of his nine Republican colleagues on the Finance Committee (all but Senator Olympia Snowe of Maine) responded with a joint letter to the president on June 5, 2009, that notes concern with the president’s expression of support for a public plan because a public plan is “one of the more divisive issues in the health care reform debate.” Click here for a copy of the senators’ letter. Clearly, as legislators move from options to concrete legislative proposals, it will be increasingly difficult to keep Republicans at the table in the Senate.
Click here for the tentative timeline for achievement of health reform.
What’s at Stake
Congress and the president are determined to overhaul the nation’s health care delivery system. Every aspect of the health sector will be affected.
Steps to Consider
Providers, insurers, employers, drug and device makers, and every other entity in the health sector should closely examine the legislative proposals, assess their impact, and develop a course of action to maximize the positive impact of health system reform and minimize the negative impact.
The Facts
House Democrats released the broad parameters of their comprehensive health reform bill June 8, 2009. The three House committees with jurisdiction over health reform plan to work from this common framework to develop a systemic reform proposal. Click here for a health reform timeline. Below are highlights of the plan:
What’s at Stake
Reporting out a House bill by the August recess is at stake. While the House Democrats have united the three key House committees in producing this common framework, considerable dissension within the Democratic party remains. A core area of disagreement is whether to include a public plan. Pressure to achieve reform this year is considerable, as the Democrats do not want to risk spilling into next year’s congressional cycle.
Steps to Consider
Providers should assess the impact of a public plan option and expanded coverage, among other proposals. Insurers should examine the impact of a Medicare-like public plan option on provider payments and the ultimate competitiveness of private plans, review the concept of the insurance exchange and assess the business impact of the proposed new insurance market reforms. Insurers that act as Medicare Advantage Plans should monitor proposals to reduce payments. Both providers and insurers should assess the potential impact of accountable care organizations. Finally, employers should carefully monitor “pay or play” proposals and prepare to adapt to potential requirements.
The Facts
The proposals under consideration in the Senate Finance Committee’s first of three anticipated health reform option papers, released on April 29, 2009, would make significant Medicare payment changes. Value-based purchasing would result in Medicare paying hospitals, home health agencies and skilled nursing facilities based on their actual performance against quality measures, rather than being paid for providing services and reporting on quality measures and activities, as they are now. Accountable care organizations would be established as a vehicle for groups of providers to voluntarily meet quality thresholds and share in cost savings achieved for the Medicare program. Bonus payments for primary care physicians and general surgeons of up to 5 percent of fee schedule amounts would be provided to physicians who furnish at least 60 percent of their services in specified ambulatory settings or practice in rural scarcity areas.
What’s at Stake
Providers will face increasing demands to shift the paradigm of patient care from a model based on fee-for-service payments to one oriented to quality measurements and care coordination. Providers also will be competing on the basis of quality and may experience changes in reimbursement individually, but the total pool of funds will not generally increase for many of the proposed reforms.
Steps to Consider
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