We know this is old news, however many of us are still wondering how the Senate Health Reform (HR 3590): Patient Protection and Affordable Care Act and the Budget Reconciliation (HR 4872): Affordable Health Care for America will affect medicine.

The Congressional Budget Office (CBO) estimates the health reform legislation will reduce the deficit by $143 billion over the first ten years and reduce the deficit by $1.2 trillion in the second ten years.  The cost of the bill over ten years is estimated to be $940 billion. 

The plan for paying for "health reform" includes: 

• Medicare payroll tax increases from 1.45 percent to 2.35 percent  (effective 2012) for individuals making more than $200,000 and for families making more than $250,000;  and, the bill creates an entirely new tax of 3.8 percent (combined employee and employer Medicare payroll tax) on unearned income (dividends, interest, royalties, etc.) for people in those same income brackets. The Joint Committee on Taxation estimates this will bring in $210 billion between 2013 and 2019.

• Excise tax (2018) at 40 percent for insurance companies on high-end insurance plans worth over $27,500 for families or $10,200 for individuals.  Dental and vision plans are exempt and not included.

• Tanning tax on indoor tanning services (10 percent).

• Drug manufacturers would pay the US government a total of $16 billion between 2011 and 2019 in fees.

• Health insurers would pay $47 billion in fees over the same period.

• Medical device manufacturers would pay a 2.9 percent excise tax on the sale of any of their wares, beginning January 1, 2013.

The health reform legislation includes drastic Medicare cuts over the next decade which may be so costly to hospitals and nursing homes that they could stop taking Medicare patients. Payments to Medicare Advantage (private insurer plans that are a substitute for traditional Medicare) would be cut by $132 billion over 10 years.  Medicare payments for home health care would also be reduced by $40 billion over the 10 year period. Other cuts in payments to hospitals would raise another $22 billion by 2019.

Under the reform bill, the government will cut $455 billion in Medicare reimbursements to doctors, nursing homes, home health care and hospitals. Of course there is always the looming 21.2 percent cut in Medicare reimbursements to doctors that was not included in the plus or minus column of the health reform legislation.

Medical device and pharmaceutical companies have to begin reporting all payments to doctors and grants to teaching hospitals beginning in 2013.  The Physicians Sunshine Payment Act was included in the health reform legislation requiring medical device makers and pharmaceutical companies to disclose all payments or gifts worth more than $10.

Of particular concern to medicine is the establishment of an Independent Medicare Payment Advisory Board (IPAB) to be appointed by the President. It takes away Congress' accountability to physicians and seniors in the Medicare program. The IPAB is mandated to recommend Medicare reforms and to make cuts if Medicare spending exceeds general health care spending.   Supposedly, neither the IPAB or the Patient-Centered Outcomes Research Institute will be allowed to ration care, set mandates for particular treatments, or deny coverage of particular treatments for Medicare patients. However, both will be able to recommend cuts in reimbursement to health care providers in order to contain costs.

Physician-owned hospitals are also in danger.  Physician-owned hospitals that do not have a Medicare provider agreement before August 1, 2010 will be prohibited from participating in the Medicare program.  Those hospitals grandfathered in will have limitations on self-referring practices.

What health reform legislation is supposed to accomplish for Americans:

• By 2020, the gap for seniors in the Medicare prescriptions "donut hole" will be closed.  Seniors hitting the donut hole by 2010 will receive a $250 rebate on prescription costs and in 2011 seniors will receive a 50 percent discount on brand name drugs.  

• Health care insurance coverage is expected to blanket the 32 million Americans not currently insured.  The legislation will establish health insurance coverage which the uninsured and self-employed can purchase through state-based exchanges.  It is expected that two thirds of the uninsured covered by this legislation will enroll in private health plans.  Subsidies for the low income families will be available if these individuals want to purchase their own health insurance on an exchange, but this will make them ineligible for Medicare/Medicaid and they cannot be covered by an employer.

• Separate health insurance exchanges will be created for small businesses to purchase coverage in 2014.  States may be able to receive funding to create these insurance exchanges.

• Other items included in the legislation are supposed to: address the simplification and reduction of the administrative burden; implement hospital value-based purchasing; add PQRI and HIT incentive payments to providers; establish systems to adjust Medicare physician payments based on quality and cost; and, modify payments to hospitals for HACs and readmissions. 

• Certain measures included in the legislation will weigh quality and efficiency, as well as report these measurements to the public.  The Medicare gainsharing demonstration will be ongoing and additional money ($1.6 billion) will be available for more gainsharing programs.  There will be "adjustments" in reimbursement rates for misvalued codes and imaging services.

• The legislation also includes significant funding for prevention, wellness and public health programs and education. It also makes investments in physician training and workforce programs. 

• The Secretary of Health and Human Services will set up a new web site to make it easier for Americans in any state to seek out affordable health insurance options. The site will also include helpful information for small businesses.

Some of the health insurance reform will include measures such as:

• Health insurers cannot deny children health insurance because of pre-existing conditions.

• A temporary high-risk pool will be set up to cover adults with pre-existing conditions. Health care exchanges will eliminate the program in 2014.

• The cut-off age for young adults to continue to be covered by their parents' health insurance rises to 27.

• Lifetime caps on the amount of insurance an individual can have will be banned. Annual caps will be limited and banned in 2014.

• New plans must cover checkups and other preventative care without co-pays. All plans will be affected by 2018.

• Insurance companies can no longer drop someone when he or she gets sick.

• Any new plan must now implement an appeals process for coverage determinations and claims.

• Insurers must reveal how much money is spent on overhead.

• Non-profit Blue Cross organizations will be required to maintain a medical loss ratio of 85 percent or higher to take advantage of IRS tax benefits.

• The establishment of a temporary program for companies providing early retiree health benefits for ages 55-64. This will help reduce the often-expensive cost of coverage for that age group unable to participate in the Medicare program.

• Medicare payment protections will be extended to rural hospitals and other health care facilities that have a small number of Medicare patients.

• New screening procedures will be implemented to help eliminate health insurance fraud and waste.

• A two year temporary credit (up to a maximum of $1 billion) is in the legislation to encourage investment in new therapies for the prevention and treatment of diseases.

So, to sum up...

There are some positive notes for this legislation as more Americans will be covered by health insurance and there should be an end to some of the insurance industry abuse.  Primary care physicians, general surgeons, and most rural physicians should see much better Medicare reimbursement and sometimes, bonuses.  Medicaid funding will increase, physician billing hassles should be reduced, and so should the deficit…by $138 billion in the first 10 years.

The most obvious cons are that the Independent Medicare Payment Advisory Board (IPAB) will reduce Congress's accountability to seniors and their physicians; and, that physician-owned hospitals will be banned in the future.  There will be cuts to reimbursement for advanced imaging services.  There is no funding for care provided to uninsured, undocumented immigrants.  Also, there is not a way to ensure validity of physician data when the Medicare Quality Reporting Data is made public.  Add all these cons to physicians' constant source of frustration - the Medicare SGR - has not been repealed and Congress has not legislated a permanent fix.

Don't feel bad if you are still confused about Health Reform.  We have all seen the large number of news articles, listened to the political pundits and may have even reviewed government sites. It is difficult to find clear, meaningful information about health care reform.  Because of the confusion, it is very possible we have left something of importance out of this summary, and we ask you to let us know so we can add it to a future TOA eConnect (electronic news) or to a TOA Connection (printed newsletter).

While the health reform dust continues to settle, TOA will continue to monitor progress or the lack of progress.  Health and Human Services (HHS) is supposed to launch a web site in July to help people to better understand health reform legislation.  Eventually, the HHS site should make it easy for Americans to compare the costs and benefits of different health insurance plans.  This HHS link has been added to our TOA web site.

Our Association always strives to offer as much information as we can, so if you see an article or site you think needs to be shared with other TOA members, please contact me.

donna@toa.org