Senate Finance Committee Approves Health Care Reform
by a 14-9 Vote

As previously reported, the Senate Finance Committee sent its health care reform legislation to the Congressional Budget Office (COB) for scoring (i.e., a cost estimate to show how it will affect spending and revenue over the next decade) on October 2. According to the COB and Joint Committee on Taxation (JCT) report (PDF, 1.2M), the amended health care reform plan would cost $829 billion over 10 years and reduce the deficit by $81 billion over the same period of time, while ensuring that 94 percent of Americans have health insurance coverage. The Committee’s product would reduce Medicare and Medcaid spending by $404 billion over 10 years and would raise $381 billion of new revenues.

Next Steps Senator Max Baucus (D-MT) , Majority Leader Harry Reid (D-NV) and the Health, Education, Labor and Pensions (HELP) Committee’s chair Chris Dodd (D-CT) will now work to merge the HELP Committee and Finance Committee bills. Major differences, such as the inclusion of a public plan (which present in the HELP legislation), would be ironed out during these negotiations. The merged product should be debated by the Senate later this month. Once the full Senate approves the merged bill, selected Members of the House of Representatives and selected Members of the Senate will be meeting in conference to reconcile the House legislation and the Senate legislation so they can vote and present a unified health care reform bill to President Obama.

During the October 13 session, Members of the Senate Finance Committee were able to express their opinion on the bill and ask questions to COB and JCT staff about the impact of the bill. The legislation was approved by the Senate Finance Committee by a 14-9 vote. Olympia Snowe (R-ME) was the only Republican to vote in favor of the Bill.

Physician-Related Provisions

Physician Payment Reform
This provision proposes a temporary fix to the scheduled 21 percent reduction in Medicare physician payment rates in 2010. The fix would provide a 0.5 percent increase in 2010. Beginning 2015, physicians will be paid differentially based on the quality of care they achieve for Medicare patient relative to the cost.

Primary Care Bonus Payment
Primary care practitioners, as well as general surgeons practicing in a health professional shortage area, would receive a 10 percent Medicare payment bonus for five years. Half of the cost of the bonuses would be offset through an across-the-board reduction in all other Part B physician services of approximately 5 percent.

Medicare Commission
The legislation would create a permanent Medicare Commission with mission to curve spending growth in the Medicare Program. The Commission would be required to implement policies that reduce health care growth by at least 1.5 percent annually starting in 2014.

Once the recommendations are submitted to Congress, MedPAC will be required to review and present its own analysis of the Commission Report. Congress would then have 30 days to review the proposed cuts package, and would need a two-third majority vote to override it.

If the growth reduction is not met, the Secretary of the U.S. Department of Health and Human Services (HHS) would have the authority to make up the balance decrease necessary through a cumulative reduction in provider reimbursement.

Physician Quality Reporting Iniative (PQRI)
This provision would require all eligible health professionals to participate into the PQRI program by 2011. Bonus payments for eligible professional who successfully report performance measures would be:

• 1 percent (of all allowed charges) in 2011 (for the 2010 reporting period)
• 0.5 percent (of all allowed charges) in 2012 (for the 2011 reporting period)

The provision also includes penalties starting 2013. Penalties for eligible professional who failed to report successfully are:

• 1.5 percent (of all allowed charges) penalty in 2013 (for the 2012 reporting period)
• 2 percent (of all allowed charges) penalty for 2014 and thereafter.

The legislation would also require the Centers for Medicare & Medicaid Services (CMS) to enhance the program by providing timely feedback to physicians on their performances and to establish an appeal process for providers who participate in the PQRI program but do not quality for the incentive payments.

Beginning in 2014, physicians who utilize significantly more resources than their peers would be subject to a 5 percent penalty.

CMS Innovation Center
The bill would create CMS Innovation Center, which would be testing, evaluating, and expanding different payment structures and methodologies which aim to foster patient-centered care, improve quality, and slow the rate of Medicare cost growth.

Physician Financial Relationship Disclosure
Medical device and pharmaceutical companies would be required to report any payments or transfers of value that are made to a physician or teaching hospital by posting on a government website. This mirrors the Physician Payments Sunshine Act of 2009 which was reintroduced by Senators Charles Grassley (R-IA) and Herb Kohl (D-WI) on January 22, 2009. The provision would not pre-empt any state or local laws that go beyond the scope of this federal requirement.

Comparative Effectiveness Research (CER)
This provision would set up a non-profit institute called “Patient Centered Outcomes Research Institute” governed by a multi-stakeholder board appointed by the Comptroller General. The Institute would be charged with identifying national priorities, developing methodology of CER research, entering in contract with qualifying entities to contact the research, and disseminating the findings of research to clinicians, patients and public. This Institute would be funded at $600 million per year and include safeguards to prohibit HHS from using the research to ration care.

Bundling Pilot
This provision would direct CMS to develop a voluntary pilot program encouraging hospital, doctors and post acute care providers to achieve savings by making the most efficient use of global payments for episodes of care. This would essentially be an expansion and extension of the Medicare Acute Care Episode Demonstration project, which would permit hospital-physician gainsharing.

Overvalued Physician Services
This provision would require the Secretary of the HHS to identify “overvalued” physician services provided by Medicare. CMS would be required to adjust payment for services “that have increased at an unusual annual rate without evidence supporting the clinical appropriateness of such growth.”