House Unveils Detailed Health Reform Proposal

House Democratic leaders recently unveiled the details of their health reform plan. CMA is currently analyzing the 800+ page bill and will provide a detailed analysis later this week. In the meantime, below are some highlights:

Medicare Physician Payment Formula : The draft bill – written jointly by the three House Committees with health reform jurisdiction – contains a long overdue overhaul to the Medicare sustainable growth rate (SGR) formula used to calculate payments to physicians. Without legislative action this year, physicians face a 21 percent cut in 2010 and an additional 6 percent cut annually for several years thereafter.

The bill would eliminate the current SGR and $285 billion in future physician payment cuts. The new methodology would create two new spending targets, one for primary care and one for all other services. While such a system would create a more stable, predictable fee schedule, it may not be adequate to keep pace with physician costs. It appears that the automatic annual updates for primary care would be approximately 2 percent and the updates for all other services 1 percent.  CMA and AMA are currently analyzing the impact the new formula would have on physicians.

There is also a supplemental 5 percent annual rate increase for primary care services a 5 percent “efficiency” bonus payment for physicians practicing in low-spending regions. Neither of these bonuses is funded by decreasing payments to specialists. The bill also authorizes demonstration projects through which physicians can affiliate and form accountable care organizations and receive bonus payments for outpatient and inpatient Medicare savings in their regions.  

Medi-Cal Rate Increase: In another important victory for physicians and patients, the House proposal would increase the Medi-Cal primary care rates to Medicare levels. CMA has been urging Congress to increase all Medi-Cal rates to Medicare levels as Congress expands Medicaid to cover the uninsured. CMA will continue to fight to increase specialty rates as well.

Mandatory Health Insurance: The House proposal would require everyone to have health coverage. It would accomplish this by expanding the Medicaid program to cover low-income families up to 133 percent of the federal poverty level (FPL); providing tax credits and subsidies to families up to 400 percent of the FPL to help them purchase insurance; and requiring medium and large employers to offer health insurance to their employees or pay into a fund on behalf of their uncovered workers.

Although we strongly support the health coverage expansion called for in this proposal, CMA is concerned that these reforms will be illusory if they don't also guarantee meaningful access to doctors. CMA believes that Congress must increase all Medicare and Medicaid reimbursement rates. Without these important rate increases, the promise of access to care for the uninsured will be a false one.

Public Health Plan: As we previously reported, the House proposal also establishes a national health insurance exchange, through which the uninsured (and only the uninsured) will be able to purchase insurance. The exchange would include both private insurance plans and a new public government-run plan. The House bill does not require all participating Medicare physicians to also participate in the new public plan. While CMA believes that a public plan could help to curb abusive behavior by private health plans and be more open to innovation, CMA is extremely concerned that the public plan pay competitive rates, compete with the private plans on a level playing field (i.e., no government subsidies, same oversight regulations), and allow physicians to privately contract with patients.

CMA also strongly opposes mandatory physician participation in any health plan. Although the current language would not require physicians to participate in the new public plan, there are many in Congress who favor mandatory participation.

Geographic Payment Localities: The bill would in 2011 transition California's outdated geographic payment localities in to metropolitan statistical areas (MSA). It holds harmless physicians who would otherwise see their payments cut by this transition for five years. Although CMA supports the MSA transition, we are strongly advocating that physicians who would face payment cuts be permanently held harmless.