House option for public plan wouldn't limit physician pay to Medicare rates

Washington -- In a concession to some conservative Democrats and rural lawmakers, House leaders late in October introduced health system reform legislation with a public insurance option that would allow physicians to negotiate rates directly with the federal government, rather than have payments tied to Medicare.

The Affordable Health Care for America Act, introduced Oct. 29, combines three separate reform measures approved earlier this year by the House committees with primary jurisdiction over health care. The proposal, which the Congressional Budget Office estimates would cost $1.055 trillion over 10 years, would cover an estimated 96% of Americans.

In part, coverage would come from a new health insurance exchange, in which a government-sponsored plan would compete with private offerings. At this article's deadline, House leaders were preparing the bill for floor consideration, with the hopes of holding a vote before the congressional Veterans Day recess starts Nov. 11.

House Speaker Nancy Pelosi (D, Calif.) and most of the Democratic caucus favor a public option with payment at Medicare rates plus 5%. Some lawmakers also want to require physicians who accept Medicare patients to accept public plan enrollees.

Instead, Pelosi offered a bill that would require direct rate negotiations with physicians, hospitals and other health professionals -- a plan that was first offered by the conservative Democratic Blue Dog Coalition.

The coalition was able to stall a July markup in the House Energy and Commerce Committee until the panel agreed to the negotiated rate plan and included stronger language allowing physicians to opt out of participation in the public option. Members said doctors in their states already are significantly underpaid by Medicare and expressed concern about hitching new coverage to a flawed payment system.

Both the opt-out option and negotiated rate plan were supported by the American Medical Association, which backed the Blue Dog compromise. The AMA was still reviewing the newest House legislation as it was being prepared for floor action.

The American Academy of Family Physicians also expressed its support for participating physicians being able to negotiate payment rates through the government-run public option.

Securing votes

President Obama has stated he wants to sign a bill that costs less than $900 billion over a decade and is fully paid for. Although the CBO score of the House bill exceeds $1 trillion, House Democratic leaders cite a net cost of $894 billion after accounting for projected new revenues. The bill is also expected to cut the federal deficit by $30 billion over 10 years.

"These affordable options will be achieved by a public health insurance option that will compete with private insurers in the new health insurance exchange marketplace," said House Majority Whip James Clyburn (D, S.C.). "This exchange will keep premiums low and insurers honest, and consumers will be able to shop for a health insurance plan that best meets their needs."

But Republicans and insurers rejected the bill, saying it would put health plans out of business and force people into government-run health care.

House GOP leadership planned to offer as an amendment an alternative health system reform plan that would implement health insurance cooperatives, allow families and businesses to purchase insurance across state lines, and enact comprehensive medical liability reforms. Rep. Michael Burgess, MD (R, Texas), said such Republican ideas so far have been ignored by Democrats following a "secretive and opaque" legislative process.

Some more liberal Democrats also expressed displeasure that Pelosi decided against going with the "robust," Medicare-based public option favored by the majority of the caucus. That option would lower the 10-year cost of the measure by an additional $85 billion by controlling spending on physicians, hospitals and other health care services.

"The best way to structure any public option would be to have sensible, consistent standards, with maximum transparency for taxpayers," said Rep. Raul Grijalva (D, Ariz.). "The robust version of the public option paying a fair and consistent Medicare-plus-five [percent] rate nationwide would undoubtedly achieve those goals. I will push to allow for a vote on a robust public option amendment, because the American people deserve that vote."

The bill faces other serious challenges. As floor consideration approached, lawmakers were still debating contentious topics surrounding health system overhaul -- most notably whether the government plan would cover illegal immigrants and fund abortion procedures.

A separate try for SGR reform

Along with the revised health system overhaul, Democratic House leaders introduced the Medicare Physician Payment Reform Act, a 10-year Medicare physician payment bill.

The measure originally was part of the system reform bill but was stripped out for separate floor consideration. The payment reform act would repeal the sustainable growth rate formula, wipe out the accumulated physician spending debt and implement a future spending growth rate target of the gross domestic product plus 1%. Preventive and primary care services would have a separate target of GDP plus 2%.

"It is time to stop passing short-term fixes for massive payment cuts that hurt physicians and threaten Medicare access for seniors and people with disabilities," said Rep. Pete Stark (D, Calif.), the House Ways and Means health subcommittee chair.

The chief effect of removing the Medicare physician pay piece from the rest of the reform bill was to decrease the total cost of the main package by about $250 billion in an effort to come in at less than $900 billion. But the move also complicates the pay measure's path to enactment.

House Democrats might re-merge the two pieces of legislation as the larger reform piece heads to a House-Senate conference committee. But Republicans already were crying foul, labeling such a potential plan as a false accounting technique that would raise the federal deficit.

Statutory "pay-as-you-go" legislation that would require Congress to offset the cost of most future spending bills will be attached to the Medicare pay bill, said a spokeswoman for House Majority Leader Steny Hoyer (D, Md.). The marriage of the $250 billion measure to the implementation of statutory pay-go is another nod to the Blue Dogs, who consider it a critical step in addressing fiscal accountability in Congress.