On Monday, Senate Finance Committee Chairman Max Baucus (D-MT) released his Framework for Comprehensive Health Reform. While the text of the full bill is not yet available, the outline below will give you a better idea of the policies discussed with the Bipartisan Six that appear in the legislation. While there is no public option, there are still mentions of health insurance exchange, and various modifications to Medicare and Medicaid payments and services. These summaries are not limited to what may be included in the final bill.
Small Business Tax Credits: Tax credits would be available for tax years 2011 and 2012 for firms with fewer than 25 employees and average wages below $40,000. Qualifying employers could receive the credit for up to two years with a maximum credit of 35%.
Part D Drug Discount Program: Beginning in 2010, in order to have their drugs covered under Medicare, manufacturers must provide a 50% discount off the negotiated price for brand-name drugs covered on plan formularies when beneficiaries enter the coverage gap. Beneficiaries are eligible provided they do not qualify for low-income subsidies, do not have employer sponsored coverage, or do not pay higher Medicare premiums under Part B or Part D.
Transparency: Beginning in 2010, health plans would be required to report the proportion of premium dollars that are spent on items other than medical care. Also, beginning in 2010, hospitals would be required to list standard charges for all services and Medicare DRGs.
Other areas of transparency include reporting of physician ownership or investment interests including the reporting of payments by manufactures to physicians or teaching hospitals. The law will not preempt local or state laws that go beyond the scope of this requirement.
Reporting drug samples but information will not available to the public.
Insurance Reform in the Non-Group Market: In 2013, health insurance plans in the individual market would be required to offer coverage on a guaranteed issue basis and would be prohibited from excluding coverage for pre-existing health conditions. Limited benefit plans and lifetime limits would be prohibited, and health insurance companies could not rescind health coverage. Health insurance premiums would be allowed to vary based only on tobacco use, age, family composition, and geographic differences. Individuals with current coverage in non-group market can keep what they have. Rules for the small group market would be the same, only phased in over five years.
Interstate Sale of Insurance: Starting in 2015, states may form “health care choice compacts” to allow for the purchase of non-group health insurance across state lines. Insurers selling policies through a compact would only be subject to the laws and regulations of the state where the policy is written or issued.
Benefit Options. Four benefit categories would be created: Bronze (minimum creditable coverage) = 65%, Silver = 73%, Gold = 81%, and Platinum = 90%
A separate “young invincible” policy would be available to young adults who desire a less expensive catastrophic coverage plan but with a requirement that preventive services be covered below the catastrophic amount. Cost-sharing for preventive benefits would be allowed. All health insurance plans in the non-group and small group market would be required, at a minimum, to offer coverage in the Silver and Gold categories.
All plans sold in the non-group and small group market would be required to cover the following benefits: preventive and primary care, physician services, outpatient services, emergency services, hospitalization, day surgery and related anesthesia, diagnostic imaging / screenings (including x-rays), maternity and newborn care, pediatric services (including dental and vision), medical / surgical care, prescription drugs, radiation and chemotherapy, and mental health and substance abuse services that meet minimum standards set by federal and state laws. Out-of-pocket limits for all benefit categories would be tied to current HSA standards.
Health Care Affordability Tax Credits: Beginning in 2013, tax credits would be available on a sliding scale basis for individuals and families between 134-300% of poverty, and in 2014, between 100-133% of poverty. No illegal immigrants will benefit from the health care tax credits.
Small Business Tax Credits: In addition to the temporary small business tax credits provided in 2011 and 2012, the proposal also includes a permanent program to provide small business tax credits once the small group insurance reforms have been implemented. In 2012, small business tax credits will be available to new businesses and firms newly offering health coverage through an exchange once the exchange is established. Credits are again limited to firms with fewer than 25 employees and average wages below $40,000, and the maximum credit available would be 50%.
In 2013, all US citizens and legal residents would be required to purchase health insurance or have some kind of health coverage or keep the plan they have today to satisfy the requirement. There would be exemptions for those with hardship or who could not afford coverage.
For taxpayers between 100-300% of poverty, the penalty for failing to obtain health coverage is $750 per year with a maximum penalty per family of $1500. For taxpayers with incomes above 300% of poverty, the penalty for failing to obtain coverage is $950 per year with a maximum penalty per family of $3800.
Employers with 200 or more employees must automatically enroll employees into health insurance plans offered by the employer. Employees may opt out if they are able to demonstrate that they have coverage from another source.
Employers would not be required to offer health insurance coverage. However, employers with more than 50 full-time employees (30 hours and above) that do not offer health coverage must pay a fee for each employee who receives the tax credit for health insurance through an exchange. The assessment is based on the amount of the tax credit received by the employee(s), but would be capped at an amount equal to $400 multiplied by the total number of employees at the firm.
As a general matter, if an employee is offered employer-provided health insurance coverage, the individual is ineligible for the tax credit for health insurance purchased through an exchange. An employee who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit.
A Medicaid-eligible individual can always choose to leave the employer’s coverage and enroll in Medicaid. In this circumstance, the employer is not required to pay a fee. Employers must provide first dollar coverage for prevention services and cannot have a maximum out-of-pocket limit greater than Health Savings Accounts standards.
The proposal authorizes funding for the Consumer Operated and Oriented Plan (CO-OP) program to foster the creation of nonprofit, member-run health insurance companies that serve individuals in one or more states. Federal loans would be provided to assist with start-up costs, and federal grants would be provided to meet state solvency requirements to those eligible for funds as outlined in the bill. Grants and loans will be awarded by the Secretary of HHS based on recommendations made by an advisory board appointed by Congress and agencies. Priority in awarding grants will be given to statewide proposals, integrated care models, and applications with significant private support.
CO-OPs would be permitted to enter into collective purchasing arrangements for services and items that increase administrative and other cost efficiencies, including claims administration, administrative services, health information technology, and actuarial services.
Prescription drugs would become a mandatory Medicaid benefit. The status of drugs used to promote smoking cessation, barbiturates, and benzodiazepines would be changed from “excludable” to “non-excludable.” Medicaid prescription drug rebates would be applied to Medicaid managed care organizations. Similarly, the rebates would be applied to new formulations of existing drugs, with an exception for orphan drugs. The rebate amounts would be increased, with the minimum rebate percentage for single-source and innovator multiple source drugs going from 15.1% to 23.1% and from 11% to 13% for generic drugs. For clotting factors and drugs approved by the FDA for pediatric use only, the rebate would be increased from 15.1% to 17.1%.
A demonstration project to evaluate the use of bundled payments for acute and post-acute care and/or concurrent physician services in up to eight states would be mandated. Coverage for a Personalized Prevention and Wellness Plan would be covered by Medicare beginning in 2011, with cost-sharing removed.
By 2011, the proposal would establish payment incentives for physicians to appropriately order high-cost imaging services, expand the Medicare physician feedback program, and penalize physicians who utilize significantly more resources than their peers. Accountable Care Organizations would be able to keep half of the savings they achieve for the Medicare program over a 3 years.
This provision would establish an Innovation Center at CMS that would have the authority to test new provider payment models with $10 billion for funding.
Starting in 2011, hospitals in the top 25th percentile of rates of hospital acquired conditions for certain high-cost and common conditions would be subject to a payment penalty under Medicare. Hospitals with readmission rates above a certain threshold would have payments for the original hospitalization reduced by 20% if a patient with a selected condition is re-hospitalized with a preventable readmission within seven days or by 10% if a patient with a selected condition is re-hospitalized with a preventable readmission within 15 days. This provision would fund eligible hospitals and community-based partnership organizations that provide patient-centered, evidence-based transitional care services to Medicare beneficiaries at the highest risk of preventable re-hospitalization.
Primary care practitioners, as well as general surgeons practicing in a health professional shortage area would receive a 10% Medicare payment bonus for five years. Graduate medical education (GME) training positions for primary care would be increased through a slot re-distribution program for currently unused training slots. The scheduled 21% reduction in Medicare physician payment rates in 2010 would be replaced with a 0.5% increase.
Certified Diabetes Educators could provide outpatient diabetes self-management training services. Physician assistants could order post-acute care services and would be recognized as attending physicians to serve hospice patients.
It would also establish a 10% cap on the amount of reimbursement a home health provider can receive from outlier payments, and it would reinstate an add-on payment for rural home health providers from 2010-2015. In 2015, hospitals’ Medicare Disproportionate Share Hospital payments would be reduced to reflect lower uncompensated care costs relative to increases in the number of insured.
The utilization rate for calculating the payment for advanced imaging equipment would be increased from 50% to 90%. The proposal also makes changes to oxygen payment and power wheelchair improvements. The Secretary would be directed to update payment rates for outpatient care provided by cancer hospitals that are exempt from the prospective payment system.
This proposal would transition to new MA benchmarks beginning in 2011 and would compute benchmarks based on the weighted average of plan bids beginning in 2014. The proposal would reduce the Part D premium subsidy amount for beneficiaries whose income is at or above the Part B income-relating thresholds. These thresholds would experience a freeze through 2019.
Medicare Commission: This provision would establish an independent Medicare Commission (MC) and non-profit institute funded with $600 million per year that would submit proposals to Congress to extend Medicare solvency and improve quality in the Medicare program. The proposal includes patient safeguards and provisions to prohibit the Secretary from using the research to ration care through any federal program.
Physician-owned hospitals with a Medicare provider agreement on or before September 1, 2009 would be permitted to continue to participate in Medicare, subject to limitations on expansions of beds, operating rooms, or procedure rooms, and new disclosure requirements. Physician-owned hospitals that do not have a Medicare provider agreement before September 1, 2009 would be prohibited from participating in Medicare. Drug, device and biologic manufacturers would be required to report any payments or transfers of value made to a physician or teaching hospital.
Prescription Drug Sample Transparency: Drug manufacturers and authorized drug distributors would be required to report to the Secretary the type and amount of drug samples requested by and distributed to practitioners, along with the practitioners’ names, addresses, professional designations and signatures. The reported information would not be made publicly available.
High Cost Insurance Excise Tax: An excise tax of 35% would be levied on insurance companies and insurance administrators for any health insurance plan that is above $8,000 for singles and $21,000 for family plans. The tax would apply to self-insured and group market plans, not the individual market. The tax would apply to the amount of the premium in excess of the threshold.
The proposal would require employers to disclose the value of the benefit provided by the employer for each employee’s coverage on a W-2 form. Contributions to health Flexible Savings Accounts (FSAs) would be limited to $2,000 per year under this proposal.
Businesses that pay more than $600 annually to corporate providers of property and services must file an information report with each provider and with the IRS. Fees would be allocated by market share in 2010 annually as follows: Pharmaceutical Manufacturing Companies $2.3 billion; Medical Device Manufacturers $4 billion; Health Insurance Providers $6 billion; and Clinical Laboratories $750 million, except for small businesses.
This is a much more market driven plan than the Public Option Plan Trigger expected to be released by the president this evening. This gives a peak in of the window about what the Senate Finance Committee Bill will eventually look like. Because of the President's Speech this evening expect Congress to increase the intensity the Health Reform Effort.