Sharp’s Pioneering ACO May Raise Bar in San Diego

By Lisa Zamosky, California Healthline Regional Correspondent

SAN DIEGO — Sharp HealthCare’s selection as the only San Diego-based provider and one of six in California to participate in the federal Pioneer Accountable Care Organization program could raise the bar for health care providers throughout San Diego County.

Through ACOs, a central feature of the Affordable Care Act, health care providers receive financial incentives to team up to provide higher-quality and lower-cost care to Medicare beneficiaries.

After many health care providers raised concerns about the initial governing rules for ACOs, CMS announced the Pioneer program in May 2011, designed specifically for organizations, like Sharp HealthCare, that already had experience providing coordinated care.

The Pioneer pilot aims to give providers a faster path to become mature ACOs, as well as earlier access to anticipated savings in exchange for taking on more financial risk up front.

Pioneer ACOs also will be able to move more quickly from a shared savings model to a population-based payment structure than other ACOs. Generally, Pioneer ACOs will share savings and losses in a traditional payment arrangement during the first two years of the program. Organizations that demonstrate savings will then be eligible to switch to a capitation, or population-based payment model.

Population-based payment is familiar territory for Sharp, with a system of seven hospitals and 2,600 affiliated physicians who care for some 280,000 members. The system also manages 39,000 Medicare Advantage beneficiaries and will take on an additional 32,000 beneficiaries through its Pioneer ACO. Last year, two of the system’s affiliated medical groups — Sharp Community Medical Group and Sharp Reese-Stealy Medical Centers — launched an ACO pilot with about 21,000 members in PPOs.

The government is hoping the Pioneer program will reduce Medicare spending by $1.1 billion over five years.

Overcoming Early Obstacles

The final set of ACO rules CMS released in October 2011 represented a number of important changes from the initial proposal. The final regulations make participation more attractive to many providers, including Sharp.

One of the initial major sticking points was the number of quality metrics that participating providers must meet to receive quality bonuses. The final regulations call for 33 measures, down from 65.

“It was very unclear as to how organizations had to perform in order to be eligible for the shared savings,” John Jenrette, CEO of Sharp Community Medical Group, said of the original regulations. “I think CMMI (the CMS Center for Medicare and Medicaid Innovation) really heard that clearly and refined those and created metrics that make sense,” he said.

A second key change involves the way in which Medicare beneficiaries are aligned to a particular ACO. Now, when ACOs form they will know which beneficiaries they are responsible for, rather than finding out when their contracts run out.

According to Alison Fleury, CEO of the Sharp HealthCare ACO, the ability to inform beneficiaries ahead of time whether they were assigned to an ACO was an important step in learning about the population Sharp will be managing.

Under the program, beneficiaries who received the majority of their care from a care provider within an ACO network during the past three years are aligned with that ACO.

Finally, the ability to move from a shared-savings model to a population-based payment arrangement was very important for many organizations.

“One thing at least some of the organizations are excited about is that eventually CMS would be willing to go to a capitated approach. I think a lot of these Pioneer ACOs, given that they are leaders in care coordination already, like that option,” said John Pickering, principal consulting actuary with the actuarial and consulting firm Milliman.

Certainly, the ability to move into a capitated payment arrangement was a critical component for Sharp. “We operate under a completely captive Part A/Part B system, so that became very interesting to us and something we thought we could do well,” Jenrette said.

Challenges Ahead

Despite years of experience operating in an ACO-like system, Lynn Dong, a principal consulting actuary with Milliman, said Pioneer ACOs are likely to find their infrastructure somewhat lacking, particularly as they take on functions historically performed by health plans.

“Some of the things that they’re going to need in place in order to be successful are utilization management functions, such as disease management, complex case management, preauthorization services, specialty referral management, and other analytic tools. In particular, financial and actuarial modeling, which has typically been performed at the health plan level, will be an important contributor to the success of these organizations,” Dong said.

Perhaps the biggest challenge Pioneer ACOs will face is that beneficiaries have the freedom to visit any health care provider accepting Medicare and not stay within their assigned ACO network.

“I think the real test for an organization like Sharp is not being able to produce quality measures, and it’s not bearing risk, it’s being able to manage the traditional Medicare population with no limitation on choice,” said Robert Berenson, a senior fellow at the Urban Institute.

Despite Sharp’s long-established integrated delivery system, plans to further invest in and refine care management, patient engagement and care coordination, among other things, will be needed to keep patients within the ACO.

Stacey Hrountas, CEO of Sharp Rees-Stealy Medical Group acknowledged the challenge. “It’s going to be up to us to develop new models to engage the patient in a different way than we’ve had to do in the past since they’re not restricted to go everywhere,” she said.

Beneficiaries are likely to see a new level of personal service, which could include a liaison who helps them navigate the system and greater efforts to engage patients in prevention and wellness, Jenrette said. “The connection with the physician and the case manager, and then the connection to the primary and the specialist will be, I think, tighter, and you’re going to see more communication, which I think the patient will appreciate.”

Dong said Pioneer ACOs also will need to analyze historical data and benchmarking to be successful. “Providers have typically been used to looking at only the services they perform,” she said. ”We’re encouraging organizations to take a bigger-picture view of the full spectrum of medical care, including both inpatient and outpatient physician costs, and then focus on areas where they could potentially employ greater utilization management efforts and initiatives.”

Will It Be Worth the Effort?

One of the program’s potential downsides, experts say, is that Pioneer ACOs may face a point of diminishing returns as they work to improve upon their already sophisticated delivery systems. Under the Pioneer program, baseline costs are figured by compiling the last three years’ experience for each provider. That means the financial gain is greater for organizations with a lot of room to lower costs.

“One of the strange things about a Shared Savings Model is if you’ve been inefficient, your potential for getting profits is much higher than if you’ve been efficient,” Berenson said.

“If an ACO has done a good job in their capitated contracts and practices the same style of care for its fee-for-service patients, the organization may have less potential for savings under the Pioneer ACO program than would other organizations,” Dong said.

Impact on the Community

Although it’s early yet, the Pioneer ACO model may necessitate that Sharp work more collaboratively with other providers in the community.

“We are just starting the Pioneer ACO and the commercial ACOs are in various stages of implementation. I think it’s too early to tell exactly what the relationships with the other providers will be and how we manage that, but it’s something we are keeping our eye on,” Hrountas said.

Beyond potential partnerships, Dong sees the possibility for positive spill-over effects to health care communities nationwide, as medical records become more portable and more easily accessed and as preventive care measures are implemented. “I think there are efficiencies to be gained,” she said.

Sharp sees that potential as well. As the system’s care delivery continues to improve, competitors in the San Diego market are likely to find they’ll need to step up their game.

“Although we’re the only Pioneer ACO in San Diego County, I think we will, in turn, raise the bar for all of our competitors in this marketplace,” Hrountas said.

Survey Finds Majority of Patients Believe EHRs Are Valuable for Care

The majority of patients find value in the use of electronic health records, according to a study commissioned by the National Partnership for Women & Families, The Hill‘s “Healthwatch” reports (Pecquet, “Healthwatch,” The Hill, 2/16).

Methodology

The study, titled “Making IT Meaningful: How Consumers Value and Trust Health IT,” was conducted by Harris Interactive in August 2011 and involved 1,961 survey respondents.

Researchers asked respondents if EHRs are or would be useful in addressing seven key elements of care, such as ensuring physicians have timely access to relevant information and helping patients communicate directly with care providers.

Study Findings

The survey found:

• Between 88% and 97% of respondents whose physicians use EHRs and between 80% and 97% of respondents whose physicians use paper records said EHRs are or would be valuable for the key elements of care;
• About 75% of respondents whose physicians use paper records said it would be valuable to switch to EHRs;
• 26% of respondents have online access to their medical records and are more supportive of health IT than those without online access; and
• 6% of respondents whose physicians use EHRs are unsatisfied with the system.

Respondents said they had more confidence in EHRs compared with paper records for tasks such as:

• Protecting patient information;
• Complying with privacy laws;
• Giving patients more control over their data;
• Earning patient trust; and
• Seeing a record of who has accessed their medical information.

Privacy Concerns

The survey found that many participants had concerns about data breaches and privacy laws. For example:

• 59% of respondents whose physicians use EHRs and 66% of respondents whose physicians use paper records believe widespread adoption of health IT systems will lead to more lost or stolen information; and
• 51% of respondents whose physicians use EHRs and 53% of respondents whose physicians use paper records believe that the privacy of medical records and personal health data currently is not well protected (Miliard, Healthcare IT News, 2/16).

The report states, “[T]his issue is not about trusting providers: More than 90% of both paper and EHR respondents trust their doctors to protect health information. Rather, this unease may point to inexperience with the capabilities of electronic systems and dissatisfaction with the legal and policy framework in place to protect health information” (Conn, Modern Healthcare, 2/16).

Implications

Christine Bechtel, vice president of NPWF, said consumers must support health IT if it is going to succeed. “If they don’t, we will see political pressure for repeal and the promise will be squandered,” Bechtel said.

National Coordinator for Health IT Farzad Mostashari said the “survey draws attention to a critical, but sometimes overlooked, facet of health IT — patients and their families need to be at the center of efforts to modernize health care’s information infrastructure” (Healthcare IT News, 2/16).

Read more: http://www.ihealthbeat.org/articles/2012/2/16/survey-finds-majority-of-patients-believe-ehrs-are-valuable-in-care.aspx#ixzz1mZzv8jiu

Panel Reaches Deal on Extension of Payroll Tax Cut, Medicare ‘Doc Fix’

Late Wednesday evening, the conference committee charged with developing an extension of the payroll tax cut, continuing unemployment benefits and delaying scheduled cuts to Medicare physician reimbursement rates came to a finalized agreement (HR 3630), the New York Times reports.

Negotiations concluded with about an hour to spare before a midnight deadline to prepare a bill for a House vote on Friday (Steinhauer/Pear, New York Times, 2/15).

Leaders of the committee hope the bill will be ready for President Obama’s approval before the congressional recess starts at the end of this week (Goldfarb/Weyl, CQ Today, 2/16).

About the Deal

The agreement includes a 10-month “doc fix,” which would allow Medicare to maintain current physician reimbursement rates, delaying a 27.4% reduction in fees set to start on March 1 (Taylor, AP/Boston Globe, 2/15). To offset the $20 billion cost of the doc fix, the agreement would:

• Cut $5 billion from the prevention and public health fund created by the federal health reform law;
• Reduce aid to hospitals when Medicare beneficiaries do not pay for services (CQ Today, 2/16); and
• Reduce Medicaid funding to Louisiana, which received increased funding from the overhaul (Bendavid/Hughes, Wall Street Journal, 2/16).

Democrats, GOP React to Agreement

Democrats were more enthusiastic than Republicans about the finalized agreement, CQ Today reports.

Rep. Henry Waxman (D-Calif.) and other Democrats were not pleased to cut funding to health care programs, but Waxman said the agreement is “not so bad I would vote against it” (CQ Today, 2/16).

Although Democrats said the prevention and public health fund is critical in order to “spend health care dollars more wisely,” the cuts could make the bill more appealing to members of the GOP (Wall Street Journal, 2/16).

Sen. Lindsey Graham (R-S.C.) said, “Not going to do this again, but if it gets us through the year, gets this issue off the table, it’s worth doing this way” (AP/Boston Globe, 2/15).

Physicians Criticize Conferees for Missed Opportunity on SGR

Physicians groups criticized the committee for failing to permanently repeal the sustainable growth rate formula, Modern Healthcare reports (Zigmond, Modern Healthcare, 2/15).

American Medical Association President Peter Carmel in a statement said the group is “deeply disappointed that Congress chose to just do another patch — kicking the can, growing the problem and missing a clear opportunity to protect access to care for patients.”

The American Osteopathic Association in a statement said the “scenario was avoidable,” and criticized the group for rejecting a “fiscally responsible proposal that would have repealed the SGR and placed Medicare on a more stable financial path” by using war savings to offset the costs (Reichard, CQ HealthBeat, 2/15).

Read more: http://www.californiahealthline.org/articles/2012/2/16/panel-reaches-deal-on-extension-of-payroll-tax-cut-medicare-doc-fix.aspx#ixzz1mZwMyXwI

CMS Plans To Review Timeline for ICD-10 Implementation

At the American Medical Association Advocacy Conference on Tuesday, acting CMS Administrator Marilyn Tavenner said the agency will consider extending the timeline for ICD-10 implementation, Modern Healthcare reports (Zigmond, Modern Healthcare, 2/14).

Background

U.S. health care organizations are working to transition from ICD-9 to ICD-10 code sets to accommodate codes for new diseases and procedures. The switch from ICD-9 to ICD-10 code sets means that health care providers and insurers will have to change out about 14,000 codes for about 69,000 codes.

Under the current timeline, health care providers and insurers have until Oct. 1, 2013, to adopt new ICD-10 code sets.

In November 2011, AMA’s House of Delegates approved a resolution pledging to block the transition to ICD-10 code sets, saying the health care industry already is overburdened by requirements under the federal health reform law and health IT incentive programs.

Tavenner’s Comments

Tavenner said, “There’s concern that folks can’t get their work done around [health IT adoption], their work done around ICD-10 implementation, and be ready for (the health law’s insurance) exchanges.”

She said, “I’m committing today to work with you to re-examine the pace at which we implement ICD-10,” adding, “I want to work together to ensure that we implement ICD-10 in a way that (meets its) goals while recognizing your concerns.”

Tavenner said CMS would formally announce its plan to propose new regulations “within the next few days” (Pecquet, “Healthwatch,” The Hill, 2/14).

Reaction

According to Government Health IT, “It’s incredibly unlikely that Tavenner or CMS would actually stop ICD-10 in its tracks, for a whole host of political reasons.” It notes that CMS could face lawsuits, given that many health care providers and payers have already spent millions preparing for the new coding system.

Chris Chute — head of Mayo Clinic’s bioinformatics division and chair of the World Health Organization’s ICD-11 Revision Steering Group — said,  ”We’re all way too far down this pike for somebody, anybody, even the government to say, ‘Oh, we were just kidding, let’s stop this foolishness and skip to the next rev.”

According to Government Health IT, the most CMS likely can do is offer a compliance delay (Sullivan, Government Health IT, 2/14).

Read more: http://www.californiahealthline.org/articles/2012/2/15/cms-plans-to-review-timeline-for-icd10-implementation.aspx#ixzz1mTIo5eNL

Lawmakers Close to Deal on Payroll Tax Cut, Medicare ‘Doc Fix’

On Tuesday, the conference committee charged with developing an extension of the payroll tax cut, continuing unemployment benefits and delaying scheduled cuts to Medicare physician reimbursement rates came to a tentative agreement, the New York Times reports (Steinhauer, New York Times, 2/14).

Members of the committee and their aides said the deal still is being finalized, but they are optimistic that an agreement would be announced on Wednesday and approved by Friday (Kane/Nakamura, Washington Post, 2/14).

The announcement came just one day after House Republicans said they would introduce legislation this week to extend the payroll tax break through the end of the year without cost offsets (New York Times, 2/14).

Details of Deal

The tentative agreement would allow Medicare to continue paying physicians at current rates, avoiding a 27.4% reduction in fees set to start on March 1 (Bendavid/Peterson, Wall Street Journal, 2/15). According to aides, the “doc fix” would delay the scheduled cuts for 10 months (Zigmond, Modern Healthcare, 2/14).

The provision is expected to cost about $20 billion (Walker, MedPage Today, 2/14).

The proposal would pay for the delay through cuts to the prevention and public health fund created by the federal health reform law, along with reductions in aid to hospitals with bad debt and other health care-related spending cuts, according to the Times (New York Times, 2/14). During negotiations, Democrats refused to capitulate on cuts that would reduce Medicare benefits, the Post reports.

Aides stressed that the final details — including how to pay for the “doc fix” — still were being worked out (Washington Post, 2/14).

Rep. David Camp (R-Mich.), chair of the conference committee, said that conferees have “a structure and a framework” for a deal.

Outlook for Passage?

Following a meeting Tuesday night, House Republicans suggested that the agreement was likely to pass.

Rep. Dennis Ross (R-Fla.) said, “I think you’ll see a fair number of dissenters on it.” However, he added, “I think they’ll have the votes to pass it”(Wall Street Journal, 2/15).

Read more: http://www.californiahealthline.org/articles/2012/2/15/lawmakers-close-to-deal-on-payroll-tax-cut-medicare-doc-fix.aspx#ixzz1mTH4oC4x

MGMA e-Source, Feb. 14, 2012

Bundling ain’t what it used to be – but it’s probably in your future

By Jeffrey B. Milburn, MBA, CMPE, independently contracted consultant, MGMA Health Care Consulting Group
The term “bundle” has a number of definitions, including “slang for a large sum of money” and “to sleep in the same bed while fully clothed, a custom practiced by engaged couples in early New England,” according to an early edition of The American Heritage Dictionary of the English Language Today.

In the context of healthcare reimbursement, the term relates to reimbursing providers who form some type of alliance to reduce costs and hopefully improve outcomes for specific procedures or episodes of care. So, in a sense, we still have sums of money (maybe not large sums) and, in this case, entities getting together to some degree, though not, most likely, sleeping in the same bed.

Numerous federal government and private payer initiatives may enable providers to share in savings from lower costs and hopefully improved quality. Providers also have an opportunity to share in risk if costs exceed reimbursement and/or specific quality metrics are not met. The overall concept of bundling is still a work in progress and will probably result in a multitude of different models based on individual situations. Questions to be addressed include:

• What procedures or chronic conditions can or should be bundled?
• Which providers will be involved?
• Who will decide how reimbursement funds be allocated among providers?
• Who will decide how potential losses be allocated among providers?
• How will providers deal with multiple payers and different bundled payment systems?
• How should you address variable patient acuity levels?
• Can separate physicians and facilities be as effective as an integrated delivery system?
• How should you address various regulatory requirements, such as gainsharing and fair market value compensation?
• What and how will quality metrics be included?

Bundling is a reimbursement model that falls somewhere between fee for service and capitation. One of the big questions that need to be addressed is how do you compensate physicians and align their interests and performance with the overall objectives of bundling?

First of all, let’s assume that a complete change from fee-for-service reimbursement to bundling will not happen overnight. Although we don’t think reimbursement for bundled services is going away, we do believe implementation will be relatively slow because of the complexity and multiple moving parts (entities) involved.

In other words, there is a strong probability that you will be running your current physician compensation plan for some time while incorporating additional components to address different payment methodologies. The additional components may include positive revenue sharing, negative loss allocation, and positive, neutral or negative incentives for quality metric attainment.

There isn’t going to be an easy, one-size-fits-all, off-the-shelf method to compensate physicians for their participation in bundled payment schemes. Payers are going to want discounts from current fee-for-service costs on bundled procedures. In addition, they will likely impose quality metric requirements to ensure that specific standards are met.

On the other hand, physicians want to be reasonably compensated for their efforts and training. They are going to look at the proposal for bundled services payment and compare it with fee-for-service reimbursement. Physicians should evaluate the potential risks and costs of meeting quality guidelines in terms of time and resources. The physician and practice entities will need to evaluate each bundled services agreement to determine how much of the payment (or loss) will accrue to each party.

The primary goals and objectives of a physician compensation plan should be addressed if a bundling component is to be incorporated. These goals and objectives could include:

• Recruiting and retaining physicians
• Ensuring that entities are fiscally responsible
• Ensuring that entities are compliant with regulations
• Promoting productivity
• Providing quality incentives
• Controlling expenses
• Managing resources wisely

The addition of different professional services reimbursement to a physician compensation plan needs to be carefully implemented to optimize the alignment of physician and organizational entity objectives.

This article was first published in MGMA Directions, the newsletter of the MGMA Health Care Consulting Group.

Health care payment systems in California are in transition, pressed by market and economic factors as well as health reform mandates. New payment approaches are emerging while traditional ones still exist. During this transitional period, health care stakeholders including providers, public and private payers, purchasers, and policymakers will be making decisions about the future of payment systems in the state.

This report provides information about the historical context of payment systems in California and the current landscape. It discusses seven common payment models and nine emerging models that have already been implemented, are undergoing experimentation, or are likely to advance in the state. Insights about the evolution of the payment system under health reform include the following:

• The transition to future payment models will be evolutionary, not revolutionary.
• There is no “one-size-fits-all” approach.
• Large employers and purchasers of health care are likely to have a dominant role in driving payment reform.

Finally, the report discusses considerations and strategies that stakeholders should take into account as they transition to future payment models. These include:

1. Greater collaboration
2. Service line consolidation
3. Robust analytics around a common patient identifier
4. Incentives that align value and effectiveness
5. Impact of the cost of doing business

The complete report is available under Document Downloads.

Document Downloads

Health Care Payment in Transition: A California Perspective (987 K)

Read more: http://www.chcf.org/publications/2012/01/payment-reform-transition#ixzz1khGmhZPk

On Thursday, the California Department of Managed Health Care ordered Anthem Blue Cross to reimburse hospitals and physicians for outstanding claims dating back to 2007, saying the insurer failed to resolve violations discovered in a state audit, the AP/San Francisco Chronicle reports.

It is unclear how much Anthem would need to pay to comply with the order.

Background

In 2008, DMHC audited California’s seven largest health plans in response to health care providers’ complaints about inappropriate denials and late or inaccurate payments (Tayefe Mohajer, AP/San Francisco Chronicle, 1/12).

In response to the audits, six of the insurers submitted corrective action plans and paid health care providers, but Anthem did not take steps to pay health care providers for violations, according to DMHC.

Details of the Order

DMHC gave Anthem 30 days to submit a plan of correction to the agency.

The department also ordered Anthem to identify claims violations (Robertson, Sacramento Business Journal, 1/12). Claims found to have been wrongly paid would need to be repaid with interest.

Anthem’s Response

According to DMHC spokesperson Rodger Butler, Anthem said it would need to review 2.6 million claims to comply with the order.

Anthem spokesperson Darrel Ng said DMHC’s order was unexpected because Anthem already paid a $500,000 fine associated with the audit in November 2010 (AP/San Francisco Chronicle, 1/12).

At that time, a DMHC letter cited an administrative penalty of $900,000 for Anthem. The agency said it would suspend $400,000 of that figure if Anthem were to show full compliance with laws governing payment of claims (Sacramento Business Journal, 1/12).

DMHC said the fine did not resolve corrective actions required by the audit (AP/San Francisco Chronicle, 1/12).

Read more: http://www.californiahealthline.org/articles/2012/1/13/state-orders-anthem-to-pay-back-providers-for-outstanding-claims.aspx#ixzz1jps4mfSG

On Thursday, House Budget Committee Chair Paul Ryan (R-Wis.) and Sen. Ron Wyden (D-Ore.) unveiled a proposal that would give Medicare beneficiaries “premium support” to purchase traditional Medicare coverage or a private health plan, the New York Times reports.

Details of Proposal

Under the plan, Medicare beneficiaries would receive a subsidy to purchase coverage through an insurance exchange where private plans would compete with traditional fee-for-service Medicare. The subsidy in each region would be set by the cost of the second least costly option, regardless of whether that was a private plan or the fee-for-service plan (Pear, New York Times, 12/14).

According to National Journal, the plan would provide more protection for beneficiaries but potentially less budget savings than a previous Medicare reform plan by Ryan.

The amount of the subsidy would vary based on the cost of the health plan (National Journal, 12/14) Lower-income beneficiaries would receive a full subsidy, while higher-income beneficiaries would receive less. The proposal would not apply to beneficiaries currently enrolled in the program and would take effect in 2022 (Radnofsky/Weisman, Wall Street Journal, 12/15).

Ryan and Wyden said they will not draft legislation for the plan. “There’s no point in drafting legislation if you know it’s not going to pass,” Ryan said. He added that because of more pressing legislative issues, like the payroll tax cut extension, he does not expect any major action on Medicare until a new Congress is seated in 2013. In an interview on Tuesday, Ryan and Wyden said they hope their proposal can help overcome the contentious political climate of late. Ryan said, “We want to demonstrate that there is an emerging consensus developing on how to preserve Medicare,” adding, “We want to move that consensus forward.”

Cost Controls

Ryan and Wyden said that the measure could drive cost down lower than current price controls by forcing private insurers to bid to provide coverage and encouraging beneficiaries to chose the lowest cost plan, the Washington Post reports (Montgomery, Washington Post, 12/14).

The proposal also would cap Medicare growth and prohibit spending from increasing by more than the growth of the economy plus one percentage point. Congress could cut payments to providers and suppliers who overspend or increase premiums for high-income beneficiaries to stay within the limit (New York Times, 12/14).

Ryan Moves Away From Controversial Plan

The Ryan-Wyden plan marks a departure from a controversial Medicare reform proposal Ryan introduced in the spring, The Hill‘s “Healthwatch” reports (Baker, “Healthwatch,” The Hill, 12/14).

Ryan’s original plan — which would alter Medicare from a fee-for-service program to one that would have beneficiaries purchase coverage on the private market — was included in the House-approved GOP FY 2012 budget resolution (H Con Res 34). The plan was widely criticized by Democrats, elderly voters and even prominent Republicans (California Healthline, 5/17).

Bipartisan Implications

Ryan and Wyden’s “unusual alliance” could lead to complications for both parties in the 2012 presidential elections, according to the Post (Washington Post, 12/14).

The GOP gained many House seats in 2010 with a campaign message that the federal health reform law would damage Medicare. Democrats have hoped to retake the House by arguing that Ryan and other House Republicans are pushing to eliminate traditional Medicare, which could increase costs for beneficiaries (New York Times, 12/14).

During debt panel discussions, members of both parties stood behind “premium support” within Medicare, which could lead to major structural changes to the program, according to lawmakers and health policy experts. Some experts say that even though the panel failed to reach a deficit-reduction deal, the group’s work could frame the Medicare debate during next year’s elections and beyond.

Republicans traditionally have supported premium support. GOP presidential candidates Newt Gingrich and Mitt Romney have endorsed variations of premium support in Medicare.

Meanwhile, some Democrats on the debt panel said that a premium support plan could work if it included enough protections for Medicare beneficiaries (California Healthline, 12/28).

Ryan, Wyden Push for Proposal in Opinion Piece

In a Wall Street Journal opinion piece, Ryan and Wyden write that members of both parties “are guilty of exploiting Medicare to frighten and entice voters.” However, they write that their plan outlines how “Democrats and Republicans can work together to ensure that American retirees — now and forever — have quality, affordable health insurance.”

The pair argue that their proposal would give beneficiaries more options and force private insurers “to develop better delivery models and design better ways to care for patients with chronic illnesses” to keep their costs lower than traditional Medicare.

Ryan and Wyden write that they “are under no illusions that [the reforms] will pass tomorrow” but their plan is “proof that Democrats and Republicans don’t have to spend next year making Medicare reform more difficult” (Ryan/Wyden, Wall Street Journal, 12/15).

Read more: http://www.californiahealthline.org/articles/2011/12/15/ryan-wyden-introduce-bipartisan-proposal-for-medicare-subsidies.aspx#ixzz1gcrJszIp

On Tuesday, the House voted 234-193 to pass a payroll tax cut extension (HR 3630), which included a two-year delay to scheduled cuts to Medicare physician reimbursements, the New York Times reports (Pear/Steinhauer, New York Times, 12/14).

Background

The bill — developed by House GOP members –- would extend a $1,000 payroll tax break that is set to expire at the end of 2011. Meanwhile, the “doc fix” would stave off a nearly 30% cut to Medicare physician payment rates that is scheduled to take effect on Jan. 1, 2012. Instead, the legislation would increase reimbursement rates by 1% over the next two years.

The plan would pay for the $38 billion fix in part by increasing Medicare premiums for high-income beneficiaries and by redirecting funding from the federal health reform law that was intended for prevention and public health services (California Healthline, 12/13).

Senate Consideration

The bill now moves to the Senate, where its chances for passage are slim, The Hill‘s “Healthwatch” reports (Pecquet, “Healthwatch,” The Hill, 12/13).

Senate Majority Leader Harry Reid (D-Nev.) said the bill is dead on arrival (AP/Washington Post, 12/14). Senate Democrats worry that the cost of the tax break extension will fall on middle-income residents under the House plan and have instead proposed a surtax on high-income individuals to cover the expense (Jackson, USA Today, 12/13).

Politico reports that Senate Democrats originally planned to vote against the House plan and then develop their own proposal for extending the tax break, but now might work to change certain parts of the House bill.

Some lawmakers said that if the GOP agrees to eliminate a provision that would push ahead the stalled Keystone XL oil pipeline project and if Democrats agree not to levy a surtax on high-income individuals, the parties could soon reach an agreement on a revised plan (Sherman/Raju, Politico, 12/13).

President Obama has said he would veto any proposal that includes the oil pipeline provision (USA Today, 12/13).

Hospitals Lobby Against GOP Plan

A group of health care providers recently sent a letter to lawmakers saying the GOP payroll tax break proposal would limit patients’ access to care by reducing Medicare hospital payments by $17 billion, Modern Healthcare reports.

The letter stated, “Specifically, the bill would reduce hospital outpatient payments by drastically cutting payments for evaluation and management services by $6.8 billion.” It added, “These services are among the most common outpatient services provided in hospitals.

House Republicans responded to the letter by noting that the Medicare Payment Advisory Commission endorsed cutting the payments to offset a doc fix. Further, the House Ways and Means Committee provided a summary showing the proposal would reduce beneficiaries’ Medicare Part B premiums by about $1.7 billion and cut their copayments by more than $11 per visit (Zigmond, Modern Healthcare, 12/13).

Read more: http://www.californiahealthline.org/articles/2011/12/14/house-passes-doc-fix-measure-senate-not-likely-to-approve-bill.aspx#ixzz1gWvGpjd8