CBO Reduces Cost of SGR Fix

On Friday, December 6, 2013, the independent Congressional Budget Office (CBO) gave renewed hope for all those pushing for a permanent fix to the SGR (background information on the SGR is available here).  In May, CBO estimated the 10-year score for a permanent fix (without any payment updates for physicians) would cost $139.1 billion.  CBO’s latest score estimates the same policy to cost $116.5 billion.  According to a footnote in the report, CBO’s revision is based in part on changes made by the Centers for Medicare & Medicaid Services (CMS) in its Medicare Physician Fee Schedule Final Rule.

CBO’s latest report comes in advance of the Senate Finance Committee markup of legislation to repeal and replace the SGR, at 10:00 am on Thursday, December 12th.  In October, the Senate Finance Committee and House Ways and Means Committee released a joint discussion draft of their proposal to repeal and replace the SGR (background available here).  House Ways and Means Committee Chairman Dave Camp (R-MI) issued a statement indicating his Committee is making progress on its version of legislation and may hold a hearing this week, though so far the hearing has not been formally announced.  The House Energy and Commerce Committee also drafted a proposal to address the SGR, which was voted on by the Committee in July (more information available here).

Dewonkify – Markup

The Meaning:  A legislative process for considering and making any recommended adjustments to a piece of legislation prior to moving the legislation forward for a committee vote of passage or defeat.

Used in a Sentence: On December 12, 2013, the Senate Finance Committee will markup legislation that aims to provide a permanent fix to the Medicare Sustainable Growth Rate (SGR) formula, and several amendments are expected to the text of the bill.

What It Means:  A markup may be the most critical part of the congressional legislative process, as it provides a true test of whether a bill can ultimately pass the House or Senate.  It is during the markup process where one can truly learn of a legislator’s position (for or against) a bill and what adjustments would be needed to ensure the support of individual committee members.  It is also where most consensus can be achieved for a piece of legislation, as it typically results in a negotiation between political parties.

During a Congressional markup, members of the Committee may ask questions to Committee staff regarding technical provisions of the pending legislation.  In addition, Members of the Committee also may offer amendments to the underlying legislation.  At the conclusion of the markup the Committee will “report out” legislation (assuming passage) and legislation is then ready to be moved to the floor of the respective Congressional chamber.

History: In many cases, when a bill comes before a committee for markup, negotiations have already occurred behind the scenes between members of Congress and interested external organizations, and the chairman of the Committee will introduce a manager’s package (an amended version of the original bill set to be marked up) or a bill in the nature of a substitute for the Committee to consider and “markup.”  When this is the situation, a markup can be brief and primarily offer an opportunity for opening statements for Committee members to be recognized and to explain their position on the legislation.

Health Care on the Hill – Upcoming Events

December 4, 2013; 3:00pm
“Adjudicating VA’s Most Complex Disability Claims: Ensuring Quality, Accuracy, and Consistency on Complicated Issues”
House Committee on Veterans’ Affairs, Subcommittee on Disability Assistance and Memorial Affairs (DAMA)
334 Cannon House Office Building

December 11, 2013; 2:15pm
“Protecting Seniors from Medication Labeling Mistakes”
Senate Special Committee on Aging
562 Dirksen Senate Office Building

December 12, 2013; 10:00am
“Open Executive Session to Consider an Original Bill to Repeal the Sustainable Growth Rate System and to Consider Health Care Extenders”
Senate Committee on Finance
215 Dirksen Senate Office Building

December 18, 2013; 2:15pm
“The Future of Long-Term Care Policy: Continuing the Conversation”
Senate Special Committee on Aging
562 Dirksen Senate Office Building

Dewonkify – Medicare Part D

Medicare is a federal program that provides health insurance coverage for people who are age 65 or older.  Individuals younger than 65 may qualify if they have certain disabilities or have End-Stage Renal Disease (ESRD).  Medicare is comprised of four parts—Parts A, B, C, and D.  Over the past few weeks, Capitol Health Record has dewonkified each of the four parts.

Definition:  Medicare Part D is a voluntary benefit that provides outpatient prescription drug coverage to beneficiaries.  The Part D benefit is operated through private plans; beneficiaries have the option of choosing either prescription drug coverage as part of their Medicare Advantage plan (more information is available here) or as a stand-alone prescription drug plan (PDP) which can be purchased in addition to traditional Medicare (Part A and Part B).

Used in a Sentence: “The Medicare Part D benefit provides seniors a way to afford their medications when they do not have other affordable drug coverage options.”

History:  The Medicare prescription drug benefit was added to Medicare as part of the Medicare Modernization Act of 2003 (MMA).  Prior to the passage of the MMA, many Medicare beneficiaries lacked access to prescription drug coverage.

When it was enacted, the standard benefit structure was as follows:  the beneficiary paid a deductible.  Once the deductible was met, the beneficiary paid 25 percent of the costs of his/her drugs and the plan paid the other 75 percent of the costs, up to the initial coverage limit (which, in 2010, was $2830 in total drug costs).  At this point, the plan stopped covering the costs of the beneficiary’s drugs (otherwise known as the “doughnut hole” or “coverage gap”) until the beneficiary’s drug costs exceeded the catastrophic coverage limit (which was $6440 in total drug costs in 2010).  At this point, the beneficiary would pay 5 percent, the plan would pay 15 percent, and Medicare would pay 80 percent of the costs for medications.  This unusual benefit design was meant to provide some drug coverage for all beneficiaries.

Many beneficiaries were very frustrated with the gap in coverage (doughnut hole).  The Affordable Care Act (“ACA”) contained provisions to incrementally address the gap in coverage, and by the year 2020, beneficiaries will no longer experience such a gap.  More information about the doughnut hole and the ACA provisions is available here.

More information about the 2014 Medicare Part D program is available here.  An overview of the Medicare Part D payment system is available here.

When the benefit first launched in 2005, the then-Bush Administration encountered some initial issues related to the launch of the website and enrollment.  While much different in scope, some politicians have compared problems with the launch of the Part D program to the problems currently being experienced with the ACA rollout (more information is available here).

Premiums:  Medicare Part D premiums vary depending on the beneficiary’s plan choice and geography.  Some plans, called “enhanced plans” provide greater coverage for prescription drugs, but usually have a higher premium.  In 2014, the standard average Medicare Part D monthly premium is estimated to be $31.

Like Medicare Part B, individuals who lack prescription drug coverage either through a former employer, Medicaid, or some other source, will face a late enrollment penalty if they delay signing up for Part D.  (More information on the Part D late enrollment penalty is available here.)

Health Care on the Hill: Week of November 18, 2013

Tuesday, November 19 

Health Care Website Data Security
House Science, Space and Technology Committee
10:00am; 2318 Rayburn House Office Building

Regulation of Mobile Medical Apps
House Energy and Commerce — Subcommittee on Health
10:00am; 2322 Rayburn House office Building

Healthcare.gov Security
House Energy and Commerce — Subcommittee on Oversight and Investigations
10:15am; 2123 Rayburn House Office Building

Wednesday, November 20 

Public and Community Health
House Energy and Commerce — Subcommittee on Health
2:00pm; 2123 Rayburn House Office Building

Small Business Health Care Exchanges
Senate Small Business and Entrepreneurship Committee
10:00am; 428 Russell Senate Office Building

Social, Economic Status and Health
Senate Health, Education, Labor and Pensions — Subcommittee on Primary Health and Aging
10:00am; 430 Dirksen Senate Office Building

Dueling Attempts to Address Cancelled Health Insurance Policies

Yesterday President Obama announced a new policy for health insurance plans offered in the individual market.  This announcement falls on the heels of less than ideal health insurance exchange enrollment figures released earlier this week.

This new policy does not require insurers to continue to offer these plans to individuals.  Whether individuals will be allowed to keep their plans will depend on two factors: (1) if the insurer decides it wants to continue to offer the product and (2) if the state insurance commissioner allows insurers to continue to offer these plans.  Plans will have to inform individuals of coverage options and the availability of tax credits available to them on the health insurance exchanges.  This new policy pertains to plans that are renewed in 2014.

Example 1

For three years Bob has purchased an individual health insurance policy from Acme Insurance Co.  This policy is very limited and does not cover maternity benefits.  Because his plan doesn’t cover all the ten essential health benefits (a list of such benefits is available here) that all plans offered in the exchange must provide, Bob receives a notice from Acme Insurance Co. canceling his policy.

Now, under the new policy, if Bob lives in a state where the State Insurance Commissioner will allow the sale of such policies AND Acme Insurance Co. decides to keep offering his policy, then Bob will be able to keep his health insurance policy.  However, Acme Insurance Co. will have to tell Bob what benefits are not included in the plan (in this case, maternity benefits) that are available to individuals on the health insurance exchanges.  Acme Insurance Co. will also have to inform Bob that depending on his income he may qualify for tax credits if he purchased health insurance on the exchanges.  

Example 2

For five years Janet has purchased an individual policy through RU Insured Co.  This policy is very limited and does not provide any prescription drug coverage.  Because her plan does not cover one of the ten essential health benefits (prescription drug coverage), she receives a notice from RU Insured Co. cancelling her policy effective January 1, 2014. 

However, unlike in the example above, Janet lives in a state where the State Insurance Commissioner is unwilling to allow companies like RU Insured to continue to sell plans that are not comparable to plans offered in the health insurance exchanges.  So, notwithstanding yesterday’s announcement, Janet will not be able to keep her existing health insurance policy from RU Insured. 

Over the past few months, individuals who had these plans have been receiving notices announcing their plans would be cancelled.  It is unknown exactly how many individuals have received such notices.  Some individuals who have received these cancellation notices are finding it more expensive to purchase health insurance coverage through the health insurance exchanges.

Shortly after details of this new policy were released, skepticism abounded as to whether this policy is the appropriate remedy to address the cancelled policies.  The American Health Insurance Plans (AHIP), the trade association for health insurance companies, released a statement warning that altering the rules after plans have had to comply with the Affordable Care Act (ACA) requirements “could destabilize the market and result in higher premiums for consumers.”  The National Association of Insurance Commissioners (NAIC) and the American Academy of Actuaries expressed similar concerns with the proposal.

At the same time, Rep. Upton (R-MI) has proposed legislation (H.R. 3350) that would not only individuals to renew these policies, but also would allow insurance companies to sell new policies that fail to meet the minimum requirements imposed under the ACA.  Such policies could be sold through 2014.

Example 3

Max has an individual health insurance policy from OK-R-US Insurance Co.  This is a catastrophic policy that doesn’t provide much coverage (only covers four out of the ten essential health benefits) and charges him more because of his pre-existing conditions.  Max’s friend Lauren would like to buy the same policy. 

Under the Administration’s proposal, Lauren would not be able to purchase this policy from OK-R-US because insurance companies would not be allowed to sell new policies to individuals.

Under H.R. 3350, OK-R-US would be allowed to sell Lauren a new policy. 

The White House released a Statement of Administrative Policy threatening to veto the legislation.

This afternoon, by a vote of 261-157, the House passed H.R. 3550; 39 Democrats voted in favor of the legislation and four Republicans voted against the bill.  The legislation now moves to the Senate, where Senator Mary Landrieu (D-LA) has introduced legislation (S. 1642) that would allow plans to continue offering policies only to current policy holders and, similar to the Administration’s proposal, these plans would have to inform policyholders about the availability of plan options on the health insurance exchanges.  However, unlike the Administration’s proposal, Senator Landrieu’s legislation would allow insurance companies to continue to offer these products beyond 2014.

CBO Releases Compilation of Offsets

On Wednesday, November 13, 2013, the Congressional Budget Office (CBO) released a 318-page report outlining 103 various options for decreasing federal spending.  CBO does not advocate for specific policy proposals; rather this document represents a compendium of the major proposals it recently has scored.  These reports are helpful because in addition to providing current cost estimates, CBO generally will include some language discussing the pros and cons of the specific policy option.  CBO also released a handy summary table of the options contained in the report.

In terms of health care savings, the report identified 16 options including:

  • Overall savings for Medicare-related policies ranged from $230 billion to $869 billion over ten years.  Included in the report are options related to converting Medicare to a premium support model ($22 to $275 billion), imposing restrictions on Medigap plans ($52 to $114 billion), increasing the age of eligibility for Medicare ($23 billion), increasing Medicare Part B and Part D premiums ($20 to $287 billion), imposing additional bundled payments on providers ($17 to $47 billion), and imposing rebates on prescription drug manufactures for Part D low-income beneficiaries ($123 billion).
  • Overall savings for policies related to health insurance exchanges and employer-sponsored coverage ranged from $476 billion to $823 billion over ten years.  Included in this report are options related to eliminating the subsidies for moderate-income individuals who purchase coverage in the health insurance exchanges ($173 billion), adding a “public option” to choices available in the health insurance exchanges ($37 billion), and reducing the tax incentives for employer-based health insurance coverage ($266 to $613 billion).
  • Overall savings for veterans’ health care policies ranged from $99 billion to $150 billion over ten years.  Included in the report were options related to adding out-of-pocket cost-sharing for TRICARE for Life ($31 billion), modifying TRICARE cost-sharing for working-age military retirees ($20 to $71 billion), and restricting Veterans’ Affairs (VA) Medical Care eligibility ($48 billion).
  • The remaining policy options included block granting Medicaid ($105 to $606 billion), limiting medical malpractice claims ($57 billion), reducing funding for National Institutes of Health (NIH) ($13 to $28 billion), and increasing the cigarette tax ($37 billion).

This compendium will prove useful as Congress continues to look for offsets to pay for various priority issues (like permanently addressing the SGR).  Of course, many of these proposals have been scored by CBO over the years (e.g., increasing the age of eligibility and imposing Medicare premium support model) and the prevailing wisdom thus far seems to be that such policies would be politically challenging to enact absent some grand bargain on entitlement reform.

Initial Health Exchange Enrollment Fails to Meet Projections

Since the state and federal health exchange marketplaces went live on October 1, 2013, approximately 106,185 people have either selected health plans or fully signed up and paid for coverage through these markets.  The first official reporting of these numbers from the Administration comes after weeks of congressional and public frustration and scrutiny over significant problems with the federal enrollment website, HealthCare.gov.  Original goals for enrollment extended into the millions by spring 2014, but in the weeks leading up to today’s announcement, the Administration sought to significantly lower expectations while promising to fix the enrollment website and help people obtain coverage.

The announcement came on the heels of a politically contentious four and a half hour hearing by the House Oversight and Government Reform Committee on challenges with the HealthCare.gov website.  During the hearing, White House Chief Technology Officer Todd Park testified before the committee and could not commit to the Administration having the website problems fixed by November 30, a promise other top Administration officials have been making since Health and Human Services (HHS) Secretary Kathleen Sebelius testified before Congress last month.

Enrollment levels within the exchanges are significant because low enrollment means that next year’s premiums will be higher, as costs are spread across a much smaller pool of individuals and individuals who have enrolled are more likely to be high utilizers of health care services.  Unless enrollment significantly increases by the March 31st deadline for open enrollment, one of the hallmark issues of the Obama Administration may fail to reach its goal of providing affordable health care to millions of uninsured Americans.

Dewonkify — Medicare Part C

Medicare is a federal program that provides health insurance coverage for people who are age 65 or older.  Individuals younger than 65 may qualify if they have certain disabilities or have End-Stage Renal Disease (ESRD).  Medicare is comprised of four parts — Parts A, B, C, and D.  Over the next few weeks, Capitol Health Record will dewonkify each of the four parts.

Definition:  Medicare Part C is otherwise known as “Medicare Advantage” (formerly “Medicare+Choice”).  These are private plans that are approved by Medicare to cover all of the services provided by Part A and Part B.  Some Medicare Advantage plans offer coverage for items not otherwise covered by Medicare (like hearing aids and eyeglasses).

Used in a Sentence:  “The premiums of Americans enrolled in Medicare Part C (Medicare Advantage) have fallen by 16 percent since 2010, Health and Human Services Secretary Kathleen Sebelius has said.” From “Where is Republican anger over Obama’s health care law?” by Juan Williams, Washington Post, September 27, 2012

History:  Medicare Advantage began as an alternative to traditional Medicare.  Some policymakers believed that private insurance companies would be able to provide beneficiaries with better, more coordinated care at a lower cost to beneficiaries and the federal government.  Medicare Advantage plans operated by private insurance companies and are available in almost every county in the country.  Medicare Advantage plans can be either health maintenance organization (HMO) plans, private fee-for-service (PFFS) plans, or regional or local preferred provider organizations (PPOs).  (More information is available here.)

Premiums:  Medicare beneficiaries pay a premium to enroll in Medicare Advantage plans; premiums vary depending on the plan offerings in the area.  Most Medicare Advantage plans also offer prescription drug coverage (called MA-PD plans).  In 2012, the average premium charged for a Medicare Advantage plan offering drug coverage was $51.43 per month.  Approximately 87 percent of Medicare beneficiaries can choose an MA-PAD plan with a $0 premium (though beneficiaries would still have to pay their Medicare Part B premium).  More information is available here.

Enrollment:  In 2012, approximately 27 percent of Medicare beneficiaries chose to enroll in a Medicare Advantage plan.

Health Care on the Hill: Week of November 11, 2013

Wednesday, October 13, 2013

9:30 a.m.
ObamaCare Implementation: The Rollout of Healthcare.gov
House Oversight and Government Reform Committee Hearing
2154 Rayburn House Office Building

10:00 a.m.
Cyber Side-Effects: How Secure is the Personal Information Entered into the Flawed Healthcare.gov?
House Homeland Security Committee Hearing
311 Cannon House Office Building

10:00 a.m.
Budget Conference Committee Meeting
1100 Longworth House Office Building

Thursday, October 14, 2013

10:00 a.m.
The Effects of the Patient Protection and Affordable Care Act on Schools, Colleges, and Universities
House Education and the Workforce Committee Hearing
2175 Rayburn House Office Building

10:00 a.m.
Obamacare Implementation Problems: More than Just a Broken Website
House Energy and Commerce Subcommittee on Health Hearing
2322 Rayburn House Office Building

10:00 a.m.
Self-Insurance and Health Benefits: An Affordable Option for Small Business?
House Small Business Subcommittee on Health and Technology Hearing
2360 Rayburn House Office Building

Friday, November 15, 2013

10:00 a.m.
Reviewing FDA’s Implementation of FDASIA
House Energy and Commerce Subcommittee on Health Hearing
2322 Rayburn House Office Building