Each Patient Counts: Massachusetts Medical Society Weblog

Obama's Health Care Budget: New Spending, New Cuts and Tax Hikes

The Obama administration’s budget plan this week features the creation of $635 billion “reserve fund” to pay for changes in the country’s health care system. It includes roughly equal measures of spending cuts and tax increases.

Based on various news summaries and other reports, here’s what Obama proposed. The estimated value of spending, cuts and tax increases come from the Obama administration.

New Spending

• Eliminate scheduled payment cuts to physicians. A 21% cut is scheduled for 2010; 40% over the next decade.
• Spend $330 million to address the shortage of health care providers in certain areas. This includes loan repayment programs for doctors, nurses and dentists who practice in under-served areas. Also, there is assistance for nursing schools.
• Increase cancer research spending at the NIH by $400 million to $6 billion.
• Spend $211 million at the HHS for research into autism, as well as for screening, public awareness and support services for autism patients
• Spend $12 billion in quality incentives to hospitals: $12 billion over 10 years

Spending Cuts

• Eliminate the 14% worth of higher payments that Medicare Advantage plans now get from the federal government and require them to submit to competitive bidding. Savings: $177 billion over 10 years. Medicare Advantage plans cover about 23% of Medicare beneficiaries.
• Set up a "regulatory pathway" to approve generic versions of biologic drugs developed by biotechnology companies. Savings: $9.2 billion over 10 years.
• Require drug makers to provide bigger discounts to Medicaid. Savings: $19.5 billion over 10 years
• Bundle Medicare payments for hospital and post-hospital care, to be split by physicians and hospitals. Savings: $17.8 billion over 10 years
• Cut payments for hospitals for preventable readmissions. $8.4 billion over 10 years.
• Reduce payments to home health agencies by $37 billion over 10 years.
• Use radiology benefit managers in Medicare. Savings: $260 million over 10 years
• Total value of spending cuts: $316 billion

Tax increases

• Increase top tax bracket to 39.6% (currently 35%)
• Limit deductions for mortgage interest and charitable donations by taxpayers in the top two tax brackets to 28%.
• Increase premiums for Medicare prescription drugs plans for high-earning taxpayers ($8 billion over 10 years)
• Allow tax cuts for upper income taxpayers to phase out in 2012
• Block phase out of the estate tax
• Total value of tax increases: $318 billion

What do you think? What's realistic, and what's not?

The Fine Print: What's in the Stimulus Bill for Health Care

The AMA has produced a nice list of the health care provisions in the federal stimulus bill.

COBRA

• Sixty-five percent temporary COBRA premium subsidy for workers who have been involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009. 
• Subsidy available for up to 9 months. 
• Subsidy would not be considered income for purposes of other federal/state program eligibility. 
• To be eligible for the subsidy, an individual must have a modified adjusted gross income below $145,000 (or $290,000 for joint filers); if the taxpayer’s income exceeds this threshold, then the premium subsidy must be repaid. For taxpayers with AGI between $125,000 and $145,000 ($250,000 and $290,000 for joint filers), the amount of the premium subsidy that must be repaid is reduced proportionately.

Medicaid

• $87 billion in additional federal matching funds is provided (from Oct. 1, 2008-Dec. 31, 2010).
• Increases Federal Medical Assistance Percentages (FMAP) for all states by 6.2%. 
• Holds states harmless against a drop in their FMAPs for FYs 2009, 2010, and first quarter of FY 2011 (e.g., if 2008 FMAP is higher than 2009, the state gets the higher 2008 rate). 
• States with large increases in unemployment will receive an additional FMAP increase. It is estimated that the conference agreement will provide about 65% of its spending via the hold harmless agreement and across-the-board increases, and about 35% via the unemployment-related increase. 
• FMAP increases will not apply to other parts of state Medicaid programs that are based on enhanced FMAP (e.g., DSH, TANF, SCHIP, child/family services, etc.). 
• States cannot use FMAP/high unemployment increases for rainy day/reserve fund. 
• States must maintain the same eligibility standards, methodologies, and procedures that were in effect on July 1, 2008, in order to receive FMAP increase. 
• States must comply with prompt pay laws in order to receive FMAP increase. 
• Extends through June 30, 2009, the current moratorium on 4 Medicaid regulations relating to provider taxes, targeted case management services, school-based services, and outpatient hospital services; states the sense of the Congress that the HHS Secretary should not promulgate as final the proposed regulations relating to cost limits on public providers, GME payments, and rehabilitative services. 
• Provides for a temporary increase in state Disproportionate Share Hospital (DSH) allotments for FY 2009 and 2010.

Health Information Technology (HIT)

• Provides approximately $19 billion for Medicare and Medicaid Health Information Technology (HIT) incentives over five years. 
• Creates statutory authority for the Office of the National Coordinator for Health Information Technology (ONCHIT) within HHS; President Bush created ONCHIT by Executive Order in 2004. 
• Establishes HIT Policy and Standards Committees that are comprised of public and private stakeholders (e.g., physicians) to provide recommendations on the HIT policy framework, standards, implementation specifications, and certification criteria for electronic exchange and use of health information. 
• HHS to adopt through the rule-making process an initial set of standards, implementation specifications, and certification criteria by Dec. 31, 2009. 
• ONCHIT will be authorized to make available an HIT system to providers for a nominal fee. 
• Provides financial incentives through the Medicare program to encourage physicians and hospitals to adopt and use certified electronic health records (EHR) in a meaningful way (as defined by the Secretary and may include reporting quality measures). Authorizes ONCHIT to provide competitive grants to states for loans to providers. 
• Medicare incentive payments will be based on an amount equal to 75% of the Secretary’s estimate of allowable charges, up to $15,000 for the first payment year.
  Incentive payments would be reduced in subsequent years: $12,000, $8,000, $4,000, and $2000, ending in 2015. Physicians who report using an EHR that is also capable of e-prescribing will no longer be eligible for the e-prescribing bonuses established by the Medicare Improvements for Patients and Providers Act (MIPPA); they will be eligible for HIT incentives only to avoid “double-dipping.” 
• Early adopters (including those who have already implemented HIT systems) whose first payment year is 2011 or 2012 will be eligible for an initial, larger incentive payment up to $18,000. In 2014, the payment limit for new adopters will be $12,000. 
• For eligible professionals in a rural health professional shortage area, the incentive payment amounts will be increased by 10 percent. 
• Also provides incentives for eligible physicians, hospitals, Federally-qualified health centers, rural health clinics, and other providers under Medicaid. 
• Physicians who do not adopt/use a certified HIT system will face reduction in their Medicare fee schedule payments of -1% in 2015, -2% in 2016, and -3% in 2017 and beyond. E-prescribing penalties sunset after 2014. 
• Both bills allow HHS to increase penalties beginning in 2019, but penalties cannot exceed -5%. Exceptions will be made on a case-by-case basis for significant hardships (e.g., rural areas without sufficient Internet access). 
• Federal privacy and security laws (HIPAA) were expanded to protect patient health information, including: defining which actions constitute a breach (including some inadvertent disclosures), imposing restrictions on certain disclosures, sales, and marketing of protected health information, requiring an accounting of disclosures to a patient upon request, authorizing increased civil monetary penalties for HIPAA violations, and granting authority to state attorneys general to enforce HIPAA.

Comparative Effectiveness Research

• The Conference Agreement provides $1.1 billion in funding for comparative effectiveness research (CER). 
• Establishes the Federal Coordinating Council for Comparative Effectiveness Research (FCC-CER), to be comprised of up to 15 representatives of federal agencies—at least half must be physicians or other experts with clinical expertise. 
• The FCC-CER will coordinate CER to reduce duplication of efforts and encourage coordinated and complementary uses of resources, coordinate related health services research, and make recommendations to the President and Congress on CER infrastructure needs. 
• Both the Report on the Conference Agreement and bill provide that the FCC-CER will not mandate coverage, reimbursement, or other policies of public or private payers. 
• CER will not include national clinical guidelines or coverage determinations. 
• The Agency for Healthcare Research and Quality (AHRQ) will receive $700 million for CER; AHRQ must transfer $400 million to NIH to conduct or support CER. 
• The Secretary will have the discretion to allocate $400 million for CER to accelerate the development and dissemination of research assessing the comparative effectiveness of health care treatments and strategies. 
• The Secretary will also be obligated to meet several requirements, including: contract with the Institute of Medicine (IOM) to produce and submit a report to Congress and the Secretary by June 30, 2009, that includes recommendations on the national priorities for CER; consider any recommendations of the FCC-CER; publish information on grants and contracts awarded with the funds within a reasonable time of the obligation of funds and disseminate research findings from such grants and contracts to clinicians, patients, and the general public, as appropriate; ensure that the recipients of the funds offer an opportunity for public comment on the research; and annually report on the research conducted or supported through the funds.

Repeal of the 3 Percent Withholding Tax

• The conference agreement delays, from December 31, 2010, to December 31, 2011, implementation of the 3% withholding tax on government contractors (including Medicare providers) that was enacted under section 511 of the Tax Prevention and Reconciliation Act of 2005. Section 511, which was intended to ensure that government contractors file their tax returns properly and promptly, would be tremendously burdensome on physician practices with their relatively small operating margins and the AMA has been working actively in a coalition effort to promote its repeal.

Other Appropriations

• Prevention and Wellness: $1 billion in funding for wellness and prevention programs, including $300 million for the section 317 immunization program; $50 million for state health-associated infections reduction strategies; and $650 million for evidence-based clinical and community-based prevention and wellness strategies that deliver specific, measurable health outcomes addressing chronic disease rates. 
• Community Health Centers: $1.5 billion for construction, renovation, and equipment, and for the acquisition of HIT systems, for community health centers, and $500 million for services. 
• Training Primary Care Providers: $500 million to address shortages by training primary health care providers, under Titles VII and VIII of the Public Health Service Act, including physicians, dentists, and nurses as well as helping pay medical school expenses for students who agree to practice in underserved communities through the National Health Service Corps. 
• Indian Health Service Facilities: $415 million to modernize aging hospitals and clinics and make health care technology upgrades to improve care. 
• NIH Research and Facilities : $10 billion in funding for NIH for new research grants and renovations and construction at the NIH’s campuses.

Physicians Must Move Quickly to Appeal Their 2009 GIC Tier Designations

Health plans that contract with the Group Insurance Commission have begun to release their tier designations for 2009-2010. So far, we know about three health plans who released their tiering  designations: Unicare, Tufts and Neighborhood Health Plans.

Physicians have a very limited time period to appeal their tier designations.

The Massachusetts Medical Society has posted a chart listing deadlines and instructions on how to appeal.  This will be updated when information from the three other GIC health plans becomes available.

Download the chart.

Payment Reform Commission Provides Interim Report on Draft Principles

The nine members of the state Payment Reform Commission spent most of their third public meeting today learning about more two alternative physician and hospital payment models.

But for many observers (including the MMS), there was more interest in the commission's brief update on its draft operating principles.

The first round of draft principles were unveiled a month ago at the commission's first meeting, and were fairly well picked apart by members and other attendees. Since then, the commission has been systematically collecting feedback from hospital officials, physicians and consumer advocates. (Business leaders are next week.)

Commission consultant Michael Bailit quickly ran through seven new concepts that the commission heard at these feedback sessions. He didn't offer any opinions on these concepts, but said they should be considered by the commission in its discussions.

The seven concepts are:

• No single payment model will work for all providers
• Payment reform should address the shortage of primary care physicians
• Payment reform should address the balance of payments between interventional and non-interventional care. (No further explanation was offered.)
• The commission should continue to evaluate payment models and identify unintended consequences from changes in payment methodology
• Payment methodologies should be transparent to all, including patients
• Payment reform needs to have interaction between payment models and health care delivery systems. (No further explanation was offered.)
• Risk adjustments should include consideration of patient socioeconomic status, as well as for health status.

Bailit said there would be discussion of the principles at the commission's next meeting on Feb. 24.

The commission then heard detailed presentations about two kinds of payment models: medical homes and pay for performance.

There was a shorter conversation about the idea of aligning payment models with benefit design - namely, consumer-directed networks and tiered networks. Commission member Dolores Mitchell, head of the Group Insurance Commission, quietly left the meeting before this part of the discussion. (The MMS has sued the GIC and two health plans to "correct the wrongs" of the GIC's physician tiering program.)

On Feb. 24, the commission is also expected to get presentations on two more payment models, episode-of-care payments and evidence-based purchasing.

The MMS has posted a suggested reading list on payment methodologies, as well as links to white papers distributed by the commission at today's meeting.

They are available at http://www.massmed.org/paymentreform

Written by Frank Fortin
Reported by Rick Gulla

The Federal Stimulus Bill: What's In It For Health Care

The conference committee's federal stimulus bill is scheduled for a House vote Friday.

Here are some of the key spending provisions related to health care (the text is based on reports provided by Congress):

• $19 billion, including $2 billion in discretionary funds and $17 billion for investments and incentives through Medicare and Medicaid to ensure widespread adoption and use of interoperable health information technology (IT).
• $1 billion for prevention and wellness programs to fight preventable diseases and conditions with evidence-based strategies.
• $10 billion to conduct biomedical research in areas such as cancer, Alzheimer’s, heart disease and stem cells, and to improve NIH facilities.
• $1.1 billion to the Agency for Healthcare Research and Quality, NIH and the HHS Office of the Secretary to evaluate the relative effectiveness of different health care services and treatment options.

New Leadership in the Massachusetts House

The new House Speaker, Robert DiLeo, announced his leadership team today. Of relevance to health care:

• Health Care Financing: Harriet Stanley, West Newbury. She was chair of the House Health Care Committee from 2001 to 2003, and has been a member of the Health Care Financing Committee since then. She succeeds Patricia Walrath, who did not run for re-election.
• Public Health: Jeffrey Sanchez, Boston
• Financial Services: Peter Koutoujian, Waltham. He had been chair of the Public Health Committee.
• Ways and Means: Charley Murphy, Burlington. Last session's chair was John Rogers, who lost the speaker's race to DiLeo.
• Majority Leader: James Vallee, Franklin.
• Assistant Majority Leader: Ronald Mariano, Quincy. He had been chair of the Financial Services Committee.
• Judiciary: Eugene O'Flaherty, Chelsea, continues in this post.

Boston Ban on Cigarettes in Pharmacies Takes Effect

The Boston Globe's website noted today that CVS and other pharmacies have begun to comply with a new city regulation banning the sale of tobacco products in pharmacies. The regulation took effect today.

It's of interest to us, because of legislation the MMS proposed last week that would ban tobacco sales in any health care facility.

Payment Reform Commission Hears From the Public

The state Payment Reform Commission held its compulsory public hearing today and heard a wide range of ideas for improving how physicians, hospitals and other providers are paid, to encourage the delivery higher quality, cost-effective health care.

It was mostly a listening session - the floor belonged to the speakers. Here's a quick rundown of some comments.

JudyAnn Bigby, MD, Secretary of Health and Human Services: She supports an all-payer, all-provider uniform payment rate, based on episodes of care.

Lucian Leape, MD: He focused his remarks on eliminating waste and improving patient safety, and how the fee for service system works against these two objectives.

David Mariotta, from the Mass. Association of Behavioral Health Systems: The ideal payment system is predictable, easily understandable, appropriately aligns incentives, funds all mandates, and is sensitive to hospitals' fixed costs.

Rick Weisbladt, MD, Harvard Pilgrim Health Care: Outlined Harvard Pilgrim's pay for performance program, which said is successful. He said 80% of HPHC's primary care physicians are in either a risk-based, or payment for performance contract.

Written by Frank Fortin
Reported by Lloyd Resnick

Payment Reform Commission to Hear Public Comments Friday

The new state Payment Reform Commission is holding a public session this coming Friday to hear the public's views on possible reform of health care payment systems.

In its public notice, the commission said it wants to hear "comments, ideas, and recommendations regarding payment models and potential implementation strategies."

It will be held on February 6 from Noon to 3 p.m. in Gardner Auditorium at the Massachusetts State House.

Read a summary of the commission's first meeting.

Commission meeting schedule and meeting materials.

Flu Activity in Massachusetts Increasing

The Mass. Department of Public Health says flu activity is increasing in Massachusetts. According to the DPH:

• Influenza-like ilnesses for the week ending 1/24/09 was 2.2%, above the regional baseline of 1.5%.  Three regions reported influenza-like illnesses of over 1.5%.
• The majority (390/480) of laboratory-confirmed cases for which influenza type is known are type A.
• Of 15 specimens that have tested positive at the State Laboratory Institute, six were A/H1N1, five were A/H3N2, three were type A that weren’t yet subtyped, and one was type B.

MA Influenza Strains and Antiviral Resistance (PDF)