Senate panel's health reform bill OK'd with 0.5% Medicare pay hike

Washington -- The Senate Finance Committee's approval of a health system reform bill on Oct. 13 set the final stage for a historic Senate floor debate in which lawmakers are expected to revisit the public health insurance option along with some of the other more controversial items proposed so far.

Senate Finance Committee Chair Max Baucus (D, Mont.) scored a political win when he secured a "yes" vote from Sen. Olympia Snowe (R, Maine), one of the six primary negotiators of the measure and so far the only GOP lawmaker to vote in favor of a Democratic reform bill. "When history calls, history calls," Snowe said, though she cautioned that her support was not guaranteed for whatever bill hits the Senate floor. Other Republican lawmakers condemned the final measure.

The bill closely resembles the version that Baucus introduced on Sept. 16. It does not propose a public health insurance plan option, which is favored by Democratic leaders and President Obama. Rather, it would implement member-owned health insurance cooperatives that would operate at the state level. The legislation also does not include a long-term reform of the Medicare physician payment system, though it would replace next year's scheduled 21.5% cut with a 0.5% increase.

The 14-9 passage of the 10-year, $829 billion Finance bill opened the door for Senate Democratic leaders to merge the measure with a more liberal bill that was approved by the Senate Health, Education, Labor and Pensions Committee in July. Senate Majority Leader Harry Reid (D, Nev.) left open the possibility that a public plan option like the one in the HELP bill might be in the final legislation he brings to the floor.

Sens. Jay Rockefeller (D, W.Va.) and Charles Schumer (D, N.Y.) offered several failed amendments during the Finance markup of the legislation that would have added a public option. They vowed to continue fighting for a government-sponsored national plan.

"Our job is to protect the American people, not protect insurance company profits," Rockefeller said. "The American people have asked for real solutions that protect their families and their economic security -- a public option does just that."

Physician organizations, including the American Medical Association, also vowed to continue the battle for a long-term Medicare pay correction as legislation moves to the floor. "Health reform must preserve the security and stability of Medicare by permanently repealing the broken Medicare physician payment formula that threatens seniors' access and choice of physician by triggering steep cuts," AMA President J. James Rohack, MD, said in response to the Finance bill's passage.

An amendment proposed during the Finance markup by Sen. John Cornyn (R, Texas) would have provided a 0.5% increase for 2011 and 2012 as well, but it was voted down. Without such a change, physicians would face a steep cut after the one-year patch expired at the end of 2010, followed by several more years of reductions.

Possibility of future pay cuts

The AMA also remains concerned about a provision in the Finance bill that would create a new commission to help stem the growth of Medicare spending.

Cost-cutting measures proposed by the new commission, possibly including rate cuts, would go into effect unless blocked by Congress. But hospitals would be exempt, based on the strength of an agreement the industry struck earlier this year with the White House to cut health spending growth by $155 billion over 10 years.

"The provision does not appear to apply equally to all health care stakeholders," AMA Executive Vice President and CEO Michael D. Maves, MD, MBA, wrote in a Sept. 21 letter to the Finance Committee. "This presents a serious inequity if spending reductions are to be found from only a fraction of the program."

Leaving hospitals out of the commission's purview also came as a surprise to Rockefeller, who sponsored the original amendment. "Sen. Rockefeller was not aware of, nor participated in, creating a special exemption for any provider group, and this has never been his position," said Rebecca Gale, the senator's spokeswoman.

Another provision in the Finance bill designed to squeeze savings from the Medicare program could hit physicians if they generally offer more care than their colleagues do. Under an existing "physician feedback program," Medicare would provide reports to doctors, starting in 2012, telling them how the level of services they provide compares with physicians on a national scale. But starting in 2014, physicians whose resource use hits or exceeds the 90th percentile would see their Medicare pay reduced by 5%.

"Given the limited experience the Centers for Medicare & Medicaid Services has had implementing the provider resource use reports authorized under current law, we believe it is unwise to authorize financial penalties on physicians identified as outliers," Dr. Maves said. "Private and state insurance programs have experienced serious problems with the accuracy and validity of episode grouper methodologies to 'profile' physicians."

Warnings about access, cost

Although Baucus was able to hold the Democratic line on his bill and attract the first Republican vote, the measure is still under heavy fire.

At least one doctor organization said the lack of a permanent Medicare pay fix and a plan to require states to foot part of the bill for a major Medicaid expansion could prompt doctors to bail out of the public health system when they are needed the most.

"The bottom line is if this bill becomes law, many senior citizens will end up struggling to find a doctor to see them," said Dev GnanaDev, MD, president of the California Medical Assn. "We will continue to work with lawmakers to craft workable health care reform, but right now, the Baucus plan does not live up to the billing. It offers a false promise of expanded coverage."

The nation's health plans also launched a broadside attack against the Finance bill as committee members were preparing for their final vote, using a line of opposition that could continue onto the Senate floor.

America's Health Insurance Plans commissioned a PricewaterhouseCoopers report, released Oct. 12, detailing how the bill would pass hundreds of billions of dollars in new health care taxes onto consumers and allow many people to wait until they are sick before purchasing coverage. The cost of the average family policy -- approximately $12,300 today -- would rise to $15,500 in 2013 under current law but up to $17,200 if the bill were enacted, the analysis concluded.

Democrats quickly dismissed the report's findings, saying they were based on numerous faulty assumptions. PricewaterhouseCoopers has since backed away from AHIP's statements on the report, saying that the firm was asked to assess the impact of selected provisions in the Finance bill, not the entire package.