Federal Relations

June 20, 2009

House Committee Chairmen Release Health Care Proposal



[Provided by the American Hospital Association]

House Ways and Means Committee Chairman Charles Rangel (D-NY), Energy and Commerce Committee Chairman Henry Waxman (D-CA) and Education and Labor Committee Chairman George Miller (D-CA) today released their draft health care reform legislation. The AHA is reviewing the language and will provide a more detailed summary in the coming days. Based on our initial read, here are some highlights:

Market Basket Update: Would reduce the annual inpatient, outpatient, inpatient rehabilitation (IRF), long-term care hospital, psychiatric hospital, skilled nursing facility (SNF) and the home health agency market basket updates by an adjustment for “productivity growth” (currently estimated at 1.3% for FY 2010) in each of the next 10 years. In addition, SNF and IRF payments would be frozen for FY 2010, and home health payments would receive a coding adjustment and freeze for a 5.5% reduction in 2010. The AHA estimates the impact of these cuts could be as much as $140 billion for hospitals and hospital-based services.

Disproportionate Share Hospital (DSH) Payments: Contains no cuts to either Medicare or Medicaid DSH payments.

Indirect Medical Education (IME): No cuts to IME are proposed.

Public Plan: Would establish a public plan that would pay providers at Medicare rates.

Medicaid: Would expand coverage eligibility up to 133% of the federal poverty level.

Readmissions: Beginning in FY 2011, hospitals with higher-than-expected readmissions rates would see their Medicare payments adjusted downward for each Medicare discharge. Performance would be evaluated based on the 30-day readmission measures for heart attack, heart failure and pneumonia that will be implemented as part of the Medicare pay-for-reporting program and reported on Hospital Compare beginning this summer. Hospitals with actual readmission rates higher than their Medicare-calculated expected readmission rate would have their Medicare payments multiplied by an adjustment factor that is the greater of:

  • A hospital-specific readmissions adjustment factor based on the number of readmissions to the hospital in excess of the hospital’s calculated expected readmission rate; or
  • 0.99 in FY 2011, 0.98 in FY 2012, 0.97 in FY 2013, and 0.95 in FY 2014 and beyond.

Post-acute providers’ payments also would be reduced when their patients are readmitted to a hospital within 30 days of the discharge.

Value-based Purchasing (VBP): Contains no plans to implement a VBP program.

Bundling: Calls for the creation of a plan to bundle Medicare payment for post-acute care services no later than three years after the law is enacted. As part of the plan, the Secretary of the Department of Health and Human Services (HHS) would need to determine whether inpatient hospital services should be included in the bundle or whether the bundle should be for post-acute care services only.

Administrative Simplification: Calls for reducing the cost and complexity of administrative requirements by:

  • Standardizing claims attachments.
  • Establishing operating rules and guides for claims transactions.
  • Increasing the consistency of claims edits and code corrections across plans.
  • Increasing electronic exchange of clinical and administrative data.
  • Standardizing quality reporting.

Physician-owned Hospitals and Self-Referral: Would eliminate the exception for physician-owned hospitals under the whole hospital and rural provider exceptions under the Stark law, but grandfather those physician-owned hospitals with a Medicare provider agreement in place by January 1, 2009 and limit the percent of physician ownership to no more than the level on the date of enactment. Would also establish patient safety requirements related to emergencies and to on-site physician availability.

Extensions: Would extend Section 508 classifications, as well as the outpatient hold-harmless provision.

Graduate Medical Education: Would redistribute unused physician residency positions and increase training opportunities in non-provider settings.

Medicaid Hospital-acquired Conditions: State Medicaid programs would be required to include policies that would not make higher payments to hospitals if a patient acquires a hospital-acquired condition during the hospital stay, similar to the Medicare hospital-acquired conditions policy.

Accountable Care Organizations (ACOs): Would establish a six-year pilot program to test different payment incentive models utilizing ACOs, beginning no later than January 1, 2012. Only physician groups would be eligible to be ACOs, but other providers (such as hospitals) could be included. Specific payment models to be tested include performance targets, partial capitation and any others deemed appropriate by the HHS Secretary.

Medical Home Pilot: Would establish a five-year pilot program to test both independent and community-based medical home models, but with some flexibility on different types and scope of services. Physicians could not participate in both an ACO and a medical home pilot.

Reducing Health Disparities: The draft includes a variety of provisions related to reducing health disparities that call for:

  • A one-year HHS study on Medicare payment for language services for all Medicare service providers, and on the extent to which state Medicaid programs are paying for such services.
  • An HHS demonstration program for no fewer than 24 three-year grants to Medicare providers to improve effective communication with Limited-English-Proficient (LEP) beneficiaries and test different payment methodologies for language services.
  • An Institute of Medicine study and report on the impact of language access services on the health and health care of LEP populations.

New Bureau of Health Information: Would create a new bureau, headed by a new Assistant Secretary for Health Information, charged with collecting, collating, reporting and publishing a broad range of health indicators. The new bureau also would be charged with coordinating the collection and reporting of health information across agencies.

Civil Monetary Penalties Law: Would amend the law regarding civil monetary penalties to increase the dollar amount for certain existing penalties and create additional situations in which penalties may be imposed; would require providers to establish compliance programs that meet designated criteria and create penalties for violations; and would establish a timeframe for reporting and repaying overpayments, subject to enforcement under the False Claims Act.