House Extenders Bill and Health Care Summary

The has introduced its substitute to H.R. 4213.  Unfortunately the preliminary CBO tables do not include a breakout of specific sections’ budgetary impact; however, the health subtitle as a whole would increase the deficit by $93.4 billion over five years and $81.5 over ten years.  A summary of the health provisions follows; bill text can be found in Subtitle B of Title V (pages 304-67).

Medicare Physician Payment:  Provides a 1.3% increase in reimbursement levels for June-December of 2010, and a 1% increase for 2011.  For 2012 and 2013, implements a target rate funding policy allowing  Medicare physician spending for evaluation and management codes, as well as preventive care, to rise at one level (GDP plus 2%), while all other spending would rise at a lower level (GDP plus 1%).  Note however that this approach would still allow for Medicare payment cuts in future years, if physician spending exceeds target levels—so the problems inherent in the SGR target mechanism would NOT be fixed, just delayed.  While the bill does state that no negative updates would be provided during the 2010-2013 period, it also guarantees a further funding “cliff” in January 2014.  The new Medicare spending would be exempt for PAYGO purposes, but it would increase the deficit regardless.  Increases the deficit by $64.9 billion over five and ten years.

Medicaid Funding:  Includes a six-month extension (through June 30, 2011) of increased federal Medicaid funding provided in the “stimulus,” which is designated as emergency spending for PAYGO purposes.  The bill clarifies that states with Section 1115 waivers covering childless adults in effect as of December 31, 2009 qualify for meeting the “stimulus” bill’s maintenance of effort requirements.  The bill also includes a new provision requiring that to obtain the additional six months of federal funding, state chief executive officers must certify “that the state will request and use such additional funds” – language which some may view as a politically motivated stunt.

COBRA Subsidies:  Extends for seven months eligibility for COBRA subsidies for individuals laid off through December 31, 2010.  The bill does not extend the length of the subsidy program beyond the current-law 15 months.  The bill designates this spending as emergency appropriations for PAYGO purposes, although it will still add to the deficit.

IRS Data Match:  Includes provisions allowing the IRS and CMS to co-ordinate data matching efforts with regard to delinquent tax debts owed by Medicare providers, and to take such information into account when releasing reimbursement payments and accepting new providers.  These provisions were originally included in Section 1303 of the substitute amendment for the reconciliation bill (H.R. 4872), but were stripped out at the House Rules Committee due to Byrd rule concerns.

340B Program:  Adds inpatient drugs to the 340B outpatient discount program, and maintains childrens hospitals’ ability to participate in the 340B discount program with respect to orphan drugs.

Health Law Clarifications:  Repeals the health law’s delay of the revised skilled nursing facility prospective payment system, as well as the law’s extension of reasonable cost payments for certain laboratory services.  Repeals section 6502 of the law, which requires states to exclude certain providers from Medicaid and SCHIP.  Includes other clarifying amendments with respect to drafting errors in the health care law.

Other Provisions:  Extends for an additional year (through September 30, 2011) the Section 508 hospital reclassification program.  Provides $175 million in mandatory appropriations to CMS to implement the act’s provisions.  Includes clarifying provisions regarding eligibility for Medicaid health IT funding provided in the “stimulus.”  Adjusts Medicare fee schedule localities in California, and includes clarifying language preventing Medicare providers from un-bundling reimbursement requests.

The Uninsured Don’t Overuse the ER — Medicaid Patients Do…

USA Today has a story this morning about a new report released by the Centers for Disease Control regarding emergency room visits in 2007.  While conventional wisdom suggests that emergency rooms spend most of their time treating uninsured patients, the study once again confirmed that the uninsured DON’T visit the ER the most often – patients with Medicaid do.  Specifically, more than 30% of Medicaid patients under 65 visited the ER at least once in 2007, compared to fewer than 20% of both uninsured patients and patients with private insurance.  And Medicaid patients were more than twice as likely as the uninsured to visit the ER at least twice in that year – more than one in seven (15%) Medicaid patients under 65 made multiple ER trips, compared to only 7% of the uninsured and 5% with private insurance.  As an ER physician quoted in the article noted, “High Medicaid utilization [of the ER] is no surprise; many patients have difficulty finding primary care providers who take Medicaid, so the ER is the only alternative.”

With 16 million more Americans set to obtain their health “coverage” (if they can find it) under Medicaid as a result of the health care overhaul, how will emergency rooms cope if many – or even some – of these patients utilize the ER as their primary source of treatment?  And how does adding more people into a broken Medicaid system constitute “reform?”

Democrats Admit: Health “Reform” Will Increase the Deficit

I wanted to draw your attention to a Dear Colleague letter circulating in the House regarding extension of state Medicaid relief in the “extenders” package currently pending (HR 4213).  The letter – signed by 216 House Democrats – asks for an extension of the “stimulus” increase in federal Medicaid funding because otherwise “states and territories will not have the resources they need to successfully implement health reform.”

In other words, Democrats have admitted that their $2.6 trillion health “reform” bill did not give states adequate funding to implement the law.  And since no Democrat has proposed paying for the nearly $25 billion in additional federal spending associated with a six-month extension of the Medicaid provision, this money will be added to our record trillion-plus dollar deficit.  Even though the majority promised that their health care law would REDUCE the deficit, they have now admitted that they first need to INCREASE the deficit to implement that law.  Or, to use Joe Biden’s phrase, Democrats need to spend money to keep the country from going bankrupt  – which many concerned about skyrocketing federal spending might consider a “big deal.”

Democrats Continue Their Backroom Deals…

In case you hadn’t seen it, multiple e-mails have been circulating about a closed-door meeting with physician groups, White House officials, and the Democrat majority in the Speaker’s office later this afternoon.  For a White House that promised “an unmatched level of transparency, participation, and accountability,” this White House really seems to love its closed-door sessions.

The bigger question is, what will happen at this meeting:

  • Will Democrats abandon all hope of paying for any adjustments made to the SGR and instead resort to increasing the deficit by a whopping $371 billion, as the Administration proposed in its budget?
  • Will Democrats cut another “rock-solid deal” with the physician community, as they did with their friends at “Big Pharma” last year?
  • Will C-SPAN cameras be allowed in the room, as the President repeatedly promised?  On second thought, given that the meeting will be held in the Speaker’s office, maybe they won’t.


From: Primus, Wendell
Sent: Wednesday, May 19, 2010 12:15 PM
Subject: SGR Update Meeting Today @ 5pm

We would like to meet with you tonight at 5pm to give an update on SGR. The meeting will take place in the Speaker’s office room H-236, U.S. Capitol. Thank you, and see you this afternoon.


Democrat Health “Reform:” Higher Costs, Higher Spending

The Washington Examiner reports this morning that Virginia has raised its estimate of the health care law’s unfunded mandate costs on the Commonwealth by nearly 40 percent, to a whopping $1.5 billion. The estimated costs for the expansion of Virginia’s Medicaid program come at a time when Democrats are negotiating behind closed doors on “extenders” legislation, which would provide nearly $25 billion in (unpaid-for) federal assistance to states for their Medicaid programs in the coming fiscal year.

These developments raise two important questions: If states can’t afford their Medicaid programs now, how will they be able to afford the addition of 16 million more individuals on to the Medicaid rolls in just a few years time? And how does adding more people into a broken Medicaid system—that neither states nor the federal government can afford—constitute “reform?”

NFIB to Challenge Health Care Law

The Associated Press this morning reports that the National Federation of Independent Business will announce today it is joining the legal challenge mounted by 20 state attorneys general to the Democrat health care law.  The fact that an organization representing 350,000 small businesses will join the state lawsuits represents one measure of the law’s continued unpopularity.  But more importantly, the NFIB’s action demonstrates the depth of the harm which this legislation will impose on businesses large and small across the country, imposing massive new taxes, fees, and regulations that will raise costs for businesses, and force many to drop their current health care offerings.

Prior to the bill’s passage, Democrats claimed that enacting the legislation would create up to four million jobs—just as they promised the “stimulus” would keep unemployment from rising above 8%.  Now the voice of America’s small businesses—the engine of job creation—have confirmed that the law will destroy their ability to create jobs and advance the cause of economic prosperity.  Only one question remains: When will Democrats finally admit the scope of the damage inflicted on the economy by their $2.6 trillion government takeover of health care?

169,000 Jobs Short…

While it’s welcome news that the economy created jobs last month, it’s worth putting it in context.  Not only do the jobs figures reflect a temporary bump in hiring of short-term government bureaucrats for this decade’s census, but they also fall far short of the number of jobs Democrats themselves promised during the health care debate.  In her opening statement at the White House summit, Speaker Pelosi noted that passage of the health care bill “will create 4 million jobs – 400,000 jobs almost immediately.”  But today’s jobs figures for April show that the private sector created only 231,000 jobs during the month – meaning that this month’s employment figures miss Democrats’ own mark for job creation by nearly half.  And job growth within the health care sector actually declined from March to April by 16,000 workers, according to the BLS survey.

Of course, it’s hard to argue that any legislation imposing over half a trillion dollars in tax increases will create jobs in the first place.  In other words, the Speaker – having taken her own advice that “we have to pass the bill so you can find out what is in it” – may well find that passing a $2.6 trillion government takeover of health care will kill jobs, rather than create them.

CBO Report Shows Cost of “Doc Fix” Skyrockets

The below piece from this morning’s CongressDaily examines a CBO table released last week that shows the cost of fixing the Medicare sustainable growth rate (SGR) mechanism “just got a lot more expensive.”  Specifically, a 10 year freeze on Medicare physician payment rates would cost $275.8 billion – up 33 percent in just one year.  A five year freeze costing “only” $88.5 billion would necessitate a 30 percent cut in Medicare payments in 2015 – another unrealistic funding “cliff” intended to mask the long-term costs of SGR reform.

Amidst Democrat discussions about adding the cost of the SGR fix to the deficit, it’s important to remember that, because seniors pay one-quarter of the cost of Medicare physician spending in the form of their Part B premiums, a portion of any unpaid-for “doc fix” will ultimately be financed by seniors themselves.  For instance, the five-year unpaid for “doc fix” would raise Medicare premiums by more than $20 billion.  So at a time when the federal government faces record budget deficits, an unpaid for SGR bill would add to the debt burden faced by America’s children and grandchildren – even while raising premiums for seniors.  This doubly unpalatable scenario leaves many to wonder: How does either course represent true reform?


Latest CBO Figures Show Higher ‘Doc Fix’ Price Tag

Tuesday, May 4, 2010

A solution for lawmakers’ annual ritual of applying a Band-Aid to Medicare physician payment cuts just got a lot more expensive, according to new estimates from congressional budget scorekeepers.

That will make it more difficult to comply with the demands for a permanent fix by physicians — who have barely begun to spend in advance of the midterm elections. Democrats are already laying backup plans to provide payment boosts for a shorter period, perhaps five years, but they need to act soon before scheduled cuts take effect June 1.

To get a sense of the increased costs, the cleanest comparison is probably an option outlined Friday by CBO to freeze Medicare payment rates, which under the new figures would cost $275.8 billion through 2020. That is a 33 percent increase from legislation that would accomplish that goal introduced late last year by Sen. Debbie Stabenow, D-Mich., estimated to cost $207 billion at the time. That bill did not advance in the Senate, nor did a House-passed bill with a different formula but a similar price tag.

Aides on both sides of the aisle attributed the cost increase to assumptions of an improved economy, which tends to add more to the cost of health services, as well as demographic changes that foresee increased numbers of retirees in 2020 over the previous year. The new estimates also take into account Medicare changes approved as part of the healthcare overhaul law, which may have produced some interactions that held back the “doc fix” cost from rising further.

The new numbers from CBO could be the final nail in the coffin for the influential physician lobby’s effort to repeal the Sustainable Growth Rate formula, which triggers automatic Medicare payment cuts if spending rises above a certain level. Simply keeping scheduled cuts at bay for five years would cost $88.5 billion, CBO said, and that is as far as February’s pay/go law will allow Congress to go without offsets. Aides said lawmakers are evaluating options that would patch the formula for a lesser amount of time but provide higher fees to physicians; they also said Democratic leaders haven’t ruled out a longer-term solution, provided they find offsets.

The measure could hitch a ride on a package of tax breaks and extensions of unemployment insurance, health subsidies for laid-off workers and other items that Democratic leaders want to enact before Memorial Day. If there is no action, Medicare physician payments would be cut 21 percent on June 1.

The American Medical Association is continuing to lobby hard for a permanent fix, despite the cost. In a statement Monday in response to the new CBO numbers, AMA President James Rohack said the cost would keep rising the more Congress resorts to short-term fixes. For example, the five-year $88.5 billion estimate factors in a “cliff” that assumes a 30 percent cut to Medicare physician fees beginning in 2015.

“It’s well known that the budgetary gimmicks used by Congress to delay Medicare physician payment cuts increase the cost of reform and the size of the cuts, so these new CBO projections are not surprising,” said Rohack. “It’s time for Congress to put aside the short-term actions that have more than quadrupled the price of a solution for American taxpayers and fix the problem once and for all for seniors, military families and their physicians.”

Based on the most recent FEC filings, the AMA’s PAC has contributed about $157,000 to lawmakers for the 2010 election cycle, according to the Center for Responsive Politics. The AMA is sitting on PAC contributions totaling $2.1 million, however, meaning they have plenty more to spend. The physicians’ lobby has been more or less even-handed, delivering about 53 percent to Democrats and 47 percent to Republicans this cycle.

by Peter Cohn

15 States Opt Out of Federal High-Risk Pool Program

Last Friday was the date by which states were requested to inform HHS as to whether or not they wanted to establish their own high risk pools as part of the $5 billion national program included in the health care law.  As of late Friday, a total of 43 states had responded to HHS.  Of those, 15 states decided to opt out – many citing the fact that the $5 billion will prove insufficient to fund claims through 2014 (a claim the CMS actuaries confirmed), which could put additional fiscal pressure on those states to make up the difference.  The states that opted out of the federal program include Alabama, Delaware, Georgia, Hawaii, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, South Carolina, Tennessee, Wyoming, and Virginia.  A full list of the 28 states that have thus far opted to run their own state risk pools is listed here on the HHS website.  A Wall Street Journal article on the issue is available here.


UPDATE: A correction/clarification: The Governor’s office in Rhode Island e-mailed me following this earlier missive to let me know that the state has NOT decided to establish its own high-risk pool.  Instead the insurance commissioner sent a letter to HHS on Friday asking for more information about how the program would run – with a particular focus on whether the $5 billion in federal funds would lead to additional burdens on the state.  While the Department apparently construed this letter as demonstrating intent to participate, the Governor’s office has made it clear to HHS that the request for more information did not constitute a decision by the state to establish its own pool, and has asked HHS to update the online list of participants accordingly (which thus far it has not done).  Sorry for any confusion.


Will Democrats Disinfect Their “Rock-Solid Deal” with Big Pharma?

President Obama used his weekly radio address over the weekend to promote Democrats’ new campaign finance “reform” law, arguing that “sunlight is the best disinfectant” in revealing corporate involvement in campaigns.  Given the President’s sudden interest in transparency, one can only ask when the White House will be releasing all the documents regarding the Administration’s “rock-solid deal” with the pharmaceutical companies – and the “windfall” which the PhRMA-sponsored ad campaign brought to David Axelrod’s consulting firm.  Republicans have previously asked for information about both the terms of the “deal” itself and the events that led up to it, but this Administration – which supposedly decries “the great power of special interests” – has yet to reveal its backroom dealings with pharmaceutical company executives.

Similarly, if Democrats are so intent on promoting transparency in politics, will they be asking PhRMA head Billy Tauzin to appear in the organization’s campaign commercials to “stand by his ad?”  PhRMA’s latest ad campaign does not include a personal appearance by the CEO of the organization – which Democrats’ “reform” legislation (S. 3295, H.R. 5175) attempts to require.  So will Democrats who co-sponsor or vote for the campaign finance legislation request that Billy Tauzin appear in any ads sponsored by PhRMA, consistent with the spirit of the legislation they support – or will they, like the Administration, continue to obscure from the American people the backroom dealings that led Big Pharma to endorse the Democrat health care takeover?