Government

Senate panel finishes health reform hearings, foresees bill by mid-June

One option being studied is limiting Medicare spending for physicians and hospitals based on adjusted national or regional averages.

By Doug Trapp — Posted June 1, 2009

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The Senate Finance Committee, fresh from public and private roundtable discussions on health system reform, appears on schedule to debate comprehensive legislation by mid-June. The measure is expected to establish a health insurance exchange for people to obtain coverage but would not include a long-term Medicare payment fix for physicians.

Senate Finance Committee Chair Max Baucus (D, Mont.) said on May 21 that he is confident the panel will reach a bipartisan agreement on reform legislation. But committee members disagree on how to pay for provisions in the bill and on the need for a national public health insurance plan to compete with private plans, according to Baucus and Sen. Charles Grassley (Iowa), the highest-ranking Republican on the Finance panel.

Grassley said the Finance Committee's public and private meetings on three main subjects -- delivery system reform, coverage options and financing methods -- helped senators better understand some nuances of health system reform. The public sessions, held between April 28 and May 12, helped produce three policy papers outlining possible provisions in a comprehensive reform bill. Grassley said he and Baucus will hold a series of partisan and bipartisan meetings in the coming weeks to work on a bill.

Meanwhile, Republicans in the House and Senate on May 20 introduced an alternate reform measure, the Patients' Choice Act. The bill would end the tax exclusion for spending on employer-sponsored health insurance and establish refundable, advanceable tax credits to help individuals buy health insurance, among other reforms. The measure is sponsored by Rep. Paul Ryan (Wis.) in the House and Sen. Tom Coburn, MD (Okla.), in the Senate.

"As a practicing physician, I have seen firsthand how giving government more control over health care has failed to make health care more affordable and accessible," Dr. Coburn said.

Baucus opposes ending the tax exclusion for employer-sponsored insurance, but he would support limiting it. However, Baucus said the Patients' Choice Act does have common goals with the policy options outlined by the Senate Finance Committee, such as "increasing focus on prevention and wellness, creating insurance pools to lower costs, improving access to health care coverage, and preventing insurance companies from denying coverage to sick individuals."

American Medical Association policy supports creation of refundable, advanceable tax credits, inversely related to income, to help populations such as low-income workers buy health insurance. AMA policy supports financing these credits in part by limiting the tax exclusion for employer-sponsored insurance and equalizing the tax treatment of health insurance.

In response to the Senate Finance Committee's April 28 policy options paper on delivery system reform, the AMA sent a letter to the panel saying the proposed delay in reforming the Medicare physician payment formula is not acceptable. The panel's paper suggests updating the Medicare physician fee schedule by 1% in both 2010 and 2011 and freezing pay in 2012. The system then would revert to existing law but might have a new maximum percentage for cuts under the sustainable growth rate formula.

The AMA recommended five years of physician payment updates based on the Medicare Economic Index, a measure of the costs of running a physician practice. That would encourage doctors to participate in delivery system reform pilot projects, the Association said.

In late May, Baucus said reducing variation in regional health spending is one method he hopes to use to limit long-term health care cost increases.

"Practice patterns vary dramatically in this country," Baucus said, citing conclusions by researchers at the Dartmouth Atlas Project on nationwide health spending differences.

The project's research found that patient outcomes in some of the higher-spending regions, such as Los Angeles, are no better, or are even worse, than in lower-spending regions, such as Minneapolis. "It's because of overutilization," Baucus said. The Dartmouth project has estimated that up to 30% of health care spending in the U.S. does not improve health outcomes, though some health researchers have questioned the figure.

The Senate Finance Committee's third policy options paper, which focused on financing health system reform, suggests two methods for limiting Medicare spending. Medicare Part A and Part B payments could be reduced in areas that exceed the national per-beneficiary spending level, with adjustments for regional differences in patient health and costs.

An alternate method would reduce pay for individual doctors and hospitals that exceed a certain threshold of Medicare spending per beneficiary compared with peers in their area. But other policy options highlighted by the committee would let physicians and hospitals share in the savings from coordinating care through accountable care organizations.

AMA President Nancy H. Nielsen, MD, PhD, said reducing inappropriate health spending variations should be based on sound evidence and not just fiscal objectives. "It is critical to understand why these variations occur and to ensure that appropriate, comprehensive risk adjustment methodology is applied," she said.

Portions of the Massachusetts universal health system reform effort found their way into the three Senate Finance policy options papers. Massachusetts was the first state to require individuals to have health insurance or face a financial penalty.

Baucus and Grassley said Finance members appear to agree on the need for personal responsibility to be part of national health reform. The panel's second policy options paper suggests that individuals should be required to have insurance coverage or pay a penalty based on premium cost.

Baucus said Finance members also appear to support a health insurance exchange to help consumers enroll in health plans and understand the coverage. The Massachusetts Commonwealth Health Insurance Connector, established under a 2006 law, serves as a link for residents to research insurance and certifies that health plans meet state coverage standards.

The third Finance policy options paper suggests narrowing the definition of medical expenses in health savings accounts and other tax-exempt health spending arrangements; additional taxes on alcohol and sugar-sweetened soft drinks; and asset tests for Medicare Part D beneficiaries.

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ADDITIONAL INFORMATION

The GOP's take on health system reform

Two Republican senators and two Republican representatives on May 20 introduced an alternative to the ideas being discussed by leading Democrats. The Patients' Choice Act of 2009 would:

  • Replace the tax exclusion for employer-sponsored health insurance with refundable, advanceable tax rebates -- $2,300 for individuals, $5,700 for families -- to buy health insurance.
  • Create state health insurance exchanges to offer coverage plans to everyone, regardless of health status.
  • Offer Medicaid enrollees additional assistance to enroll in private health plans.
  • Allow physicians, hospitals, nurses, pharmacists and others to create accountable care organizations. Members of the organizations could share in the savings from implementing care coordination, wellness programs or other innovations.
  • Require couples earning more than $170,000 to pay slightly higher Medicare Part B premiums. The government also would use asset tests to identify wealthy retirees enrolling in Medicare Part D.
  • Support alternatives to medical lawsuits, such as creating six-person state panels -- three lawyers and three medical professionals -- to judge the merit of and appropriate damages for alleged malpractice. Another model could be health courts presided over by judges with health care expertise.

Sources: Bill text, Office of Rep. Paul Ryan (R, Wis.) (link)

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