Medicare

The House approved a one-year "doc fix" Thursday afternoon that will prevent a dramatic cut in Medicare physician payments.

The bill taps into subsidies for state-run insurance exchanges created by the new healthcare reform law.

President Obama gave his blessing Wednesday afternoon to the one-year deal reached by Senate leaders to delay a scheduled 25 percent cut in payments to Medicare physicians. The $19.2 billion proposal draws on funding from the new healthcare reform law.

"I am pleased Democratic and Republican leaders in the Senate have agreed on legislation that will prevent a significant pay cut for doctors from taking effect and help ensure seniors on Medicare can continue to see the doctor they know and trust," Obama said in a policy statement.

"I encourage Congress to act quickly on this proposal," he continued. "This agreement is an important step forward to stabilize Medicare, but our work is far from finished. For too long, we have confronted this reoccurring problem with temporary fixes and stop-gap measures. It’s time for a permanent solution that seniors and their doctors can depend on and I look forward to working with Congress to address this matter once and for all in the coming year.”

The healthcare reform law creates state-run exchanges through which certain people may purchase insurance starting in 2014. The law includes subsidies for those under a specified income limit — about $88,000 for a family of four — and includes recapture penalties to those whose income exceeds the limit. The law provided a flat-cap penalty of $250 for individuals and $400 for families, but the doc-fix agreement reached Tuesday night is funded by a new penalty scale that hits higher-income earners with larger fines.

As Senate leaders consider a proposal for a yearlong fix to avert a scheduled 25 percent reduction in Medicare payments, the aging lobby is warning Congress that failure to stave off the cuts will upset their constituents.

Four in five seniors are worried that their doctors may stop treating Medicare patients if Congress cannot agree on a fix, according to an AARP Massachusetts survey released Wednesday. Meanwhile, 81 percent are concerned about having to find a new doctor if their current physician ceases accepting Medicare.

The poll indicated that more than 75 percent of seniors, regardless of party affiliation, would be more favorable to senators if they fought to protect Medicare payments to doctors. However, 83 said they would view their senators less favorably "if they did nothing to stop this cut."

“Our members are scared that their doctors may stop treating Medicare patients, and that they won’t be able to find a new one,” Deborah Banda, director of AARP Massachusetts, said in a statement. “Across party lines — Democrat, Republican, Independent — they want members of Congress to stop this cut, and say they will view their elected officials less favorably if they don’t.”

More than two-thirds of survey respondents say a more permanent solution to Medicare doctor payments is needed. The president’s debt commission last week agreed in its final proposal, which made overhauling the Medicare physician payment formula a main part of its plan for lowering healthcare costs.

Senate leaders announced late Tuesday night legislation to delay a 25 percent cut in Medicare payments that will take effect Jan. 1 without congressional intervention.

The bill, the Medicare and Medicaid Extenders Act of 2010, taps into subsidies for state-run insurance exchanges created by the new healthcare reform law to pay for the $19.2 billion, one-year "doc fix" to Medicare physician rates.

Majority Leader Harry Reid (D-Nev.), Minority Leader Mitch McConnell (R-Ky.), Finance Committee Chairman Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa) hammered out the agreement over the past few days and announced it Tuesday night. They are hoping to bring the agreement to a vote by unanimous consent as early as Wednesday, a Senate aide told The Hill.

The healthcare reform law creates state-run exchanges through which certain people may purchase insurance starting in 2014. The law includes subsidies for those under a specified income limit — about $88,000 for a family of four — and includes recapture penalties to those whose income exceeds the limit. The law provided a flat-cap penalty of $250 for individuals and $400 for families, but the doc-fix agreement reached Tuesday night would create a sliding scale for penalties.

The legislation announced last night also extends a number of Medicare provisions, including an extension of the therapy caps exception process through Dec. 31, 2011, for $900 million over 10 years.

It also would repeal a delay in the implementation of the new Medicare payment structure for nursing homes. The nursing home industry had been pushing hard for a repeal of the delay, which was included in the healthcare reform law. The new payment system would be effective Oct. 1, 2010, instead of Oct. 1, 2011, if the doc fix is approved.

A list of all the extenders and other provisions included in the bill can be found here. 

If approved by Congress, this would mark the fifth patch to Medicare payments this year. The most recent patch, agreed to last month, will only last through the end of the year.

Senate leaders reached a one-year bipartisan agreement to freeze Medicare physician payments using a healthcare reform provision to avoid a massive rate reduction scheduled for next year, a Senate aide told The Hill.

The $19.2 billion “doc fix,” which avoids a scheduled 25 percent reduction in Medicare physician payments starting Jan. 1, is paid for by recovering a larger share of subsidies designated for people to buy health insurance through state-run exchanges starting in 2014, the aide said.

The measure is expected to be brought up for approval by unanimous consent sometime tomorrow, according to the aide.

The reform law created insurance exchanges, beginning in 2014, for people who are unemployed, self-employed or work for business that doesn’t offer insurance. Almost 20 million may be eligible for subsidies, with the cutoff level set at four times the federal poverty level — or about $88,000 for a family of four. The deal reached Monday night would increase financial penalties to those who misrepresent their income to the insurance exchanges.  

The agreement was reached Monday night by staff for Majority Leader Harry Reid (D-Nev.), Minority Leader Mitch McConnell (R-Ky.), Finance Committee Chairman Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa), the aide said.

Congress has already approved four separate doc fixes this year, with the most recent agreement lasting only a month. The $1 billion fix was paid for by cutting therapy service payments by 20 percent.

The presidential deficit commission report that was voted down last week recommended a more permanent solution to the sustainable growth rate, which is the formula used to determine Medicare physician payments.

Private insurance plans might be better at controlling healthcare costs than Medicare, according to a Health Affairs study released Tuesday morning.

The study followed up on an influential 2009 New Yorker article that found Medicare spending on the elderly population is significantly higher in McAllen, Texas, than it is in El Paso, Texas. Using medical and expense data for patients in those towns who are privately insured by Blue Cross and Blue Shield, researchers found private insurers were cheaper and had a more consistent cost structure.

Researchers said their findings were consistent with the New Yorker article that found doctors were increasing the use of profitable Medicare services when they were not being closely monitored. However, private insurance plans, because of their more stringent reviews for the use of medical services, might be better at containing costs, researchers said.

According to the study, Medicare spent almost double in McAllen ($14,817 per patient) than what it spent on an average El Paso beneficiary ($7,947 per patient). Both figures, however, far surpassed private insurance costs: Blue Cross spent $2,266 on the average McAllen enrollee, while spending $2,428 on the average El Paso enrollee.

Researchers said home healthcare accounted for the greatest variability in Medicare spending between the two regions, with McAllen using the service 4.6 times more than in El Paso. Researchers found even more variations in services, including double the rate of cardiac surgery in McAllen. However, those sharp variations in the use of Medicare services were not found in the private insurance population under the age of 65.

Ultimately, the variation in services might be explained by private insurance companies and Medicare exhibiting “very different interactions” with local providers, researchers said.

The Medicare agency on Wednesday proposed to continue its current policy of not covering Magnetic Resonance Imaging (MRIs) for patients with implanted pacemakers and cardioverter defibrillators. 

The agency in a draft memo, however, recommends conducting a clinical study to verify that MRIs' magnetic field doesn't interfere with the devices, which could either skew test results or cause the implanted devices to malfunction.

The Centers for Medicare and Medicaid Services "believes that the evidence is promising although not yet convincing that MRI will improve patient health outcomes if certain safeguards are in place to ensure that the exposure of the device to an MRI environment adversely affects neither the interpretation of the MRI result nor the proper functioning of the implanted device itself," the memo reads. "We believe that specific precautions ... could maximize benefits of MRI exposure for beneficiaries enrolled in clinical trials designed to assess the utility and safety of MRI exposure."

Calling federal healthcare spending “our single largest fiscal challenge over the long-run,” President Obama’s deficit commission’s final report urged for immediate reforms to the formula for physician payments and a long-term care insurance program created earlier this year.

The report, released Wednesday morning, recommended freezing the sustainable growth rate (SGR), which determines doctors’ Medicare pay, through 2013 and providing a 1 percent cut in 2014. It further recommended that the Centers for Medicare and Medicaid Services develop an improved payment formula that encourages care coordination and pays doctors based on quality, instead of quantity, of services. The recommendations come as the healthcare industry urges Congress to delay a scheduled 23 percent cut in Medicare pay until at least the end of 2011.

The commission also recommended repealing or reforming the Community Living Assistance Services and Supports (CLASS) Act, established in healthcare reform to provide long-term care insurance through employers. Although the law said the program was sustainable for 75 years, the deficit commission said it is viewed as “financially unsound.” However, it noted that repealing the CLASS Act will increase the deficit over the next decade because the program’s premiums are collected up front and benefits are not paid out for five years.

To offset the costs of the SGR fix and lost receipts from the first decade of the CLASS Act, the commission identified $400 billion in savings from 2012 to 2020 through numerous actions, including: increasing funding and authority to combat Medicare fraud; reforming Medicare cost-sharing rules; extending Medicaid drug rebate to dual eligibles in Part D; reducing excess payments to hospitals for medical education; accelerating home health savings in healthcare reform; reforming medical malpractice and more.

The commission set a long-term goal for establishing a global budget for total healthcare spending that limits growth to GDP plus 1 percent starting in 2020.

The commission also recommended expanding the powers of the controversial Independent Payment Advisory Board (IPAB), which was created by healthcare reform. According to the recommendations, the IPAB should be allowed to make recommendations for: cost-sharing and benefit design and to look beyond Medicare; adjusting the federal-state responsibility for Medicaid; establishing a robust public option in the healthcare exchanges; raising the Medicare retirement age; and moving toward some type of all-payer system. Republicans have promised an effort to repeal the IPAB, which they criticize as providing too much power to “unelected, unaccountable bureaucrats.”

The deficit commission chairmen have already acknowledged they might not have the votes to support the final draft. A vote is expected Friday.

Medicare beneficiaries of retirement age will need upwards of nearly $150,000 in savings to cover health insurance premiums and out-of-pocket expenses in order to have a 50-50 chance of being financially secure in retirement, according to a new report from the nonpartisan Employee Benefit Research Institute (EBRI).

Men 65 and older will need anywhere from $65,000 and $109,000 in savings to cover health costs to have a 50-50 chance of having enough money in retirement, according to the study. If they want to improve their odds to 90 percent, they will need between $124,000 and $211,000.

Women of retirement age this year need even more savings. For 50-50 odds, they need between $88,000 and $146,000 in savings. For 90 percent, they need $134,000 to $242,000.

The projected savings requirements for those currently 55 years old will be even greater, EBRI said. Men will need to save between $110,000 and $354,000, while women will need to save between $147,000 and $406,000.

"Because employers are continuing to scale back retiree health benefits, and policymakers may soon begin to address Medicare's funding shortfall, more of the financial costs of health care will be shifted to Medicare beneficiaries in the future," said Paul Fronstin, reporter co-author and director of EBRI's Health Research and Education Program.