WeeklyFinancingNewsPulseNationalEditionfinal20100108.pdf (PDF | 326.90 kb)
SAMHSA222s Weekly Financing News Pulse: National Edition January 8, 2010 1/8/10 1 SAMHSA222s Weekly Financing News Pulse: National Edition National News Senate Passes Health Care Reform Bill; Democrats to Reconcile House and Senate Bills Update: President Signs Bill Extending ARRA COBRA Subsidy, Temporarily Freezes Medicare Physician Reimbursements HUD Awards $1.4 Billion in Homelessness Assistance Grants, Funds Some Behavioral Health Care Services Rep. Hastings Introduces Bill Requiring Medicare to Reimburse PHPs for Food and Transportation House Passes Jobs for Main Street Act, Includes Increased Funding for Medicaid and COBRA VA Delays Drug Copayment Increase Until July Studies Released CMS Study Finds Health Care Spending Growth Rate Dropped in 2008 Secretary Sebelius Released Report Highlighting the Benefits of Health Care Reform GAO Examines Conversion of Medicare Managed Care Cost Plans to MA Plans Hewitt Analysis Finds High COBRA Enrollment Rate Among Subsidy Eligible Employees KFF Report Examines Medicaid Financing Alternatives Exchanges and Individual Subsidies will Reduce Small Business222 Health Care Costs Around the Hill: Hearings on Health Financing To Subscribe to SAMHSA222s Weekly Financing News Pulse, please go to the following link and choose 223Health Care Financing224: https://service.govdelivery.com/service/multi_subscr ibe.html?code=USSAMHSA&origin=http://www.samhsa.go v/enetwork/success.aspx For questions or comments, please contact Kevin Hennessy ( kevin.hennessy@samhsa.hhs.gov ). SAMHSA222s Weekly Financing News Pulse: National Edition January 8, 2010 1/8/10 2 National News Senate Passes Health Care Reform Bill; Democrats to Reconcile House and Senate Bills: After a series of procedural votes, including the approval of Senate Majority Leader Harry Reid222s (DNV) Managers Amendment , the Senate passed the Patient Protection and Affordable Care Act of 2009 ( HR 3590 ) in a 60 to 39 partyline vote on December 24 ( Washington Post, 12/25 ). According to the Congressional Budget Office (CBO), which published an official score on December 19 and an updated score December 20 correcting estimated effects of the legislation after 2019, the bill would cost $871 billion over 10 years but reduce the deficit by $132 billion over that period. The CBO also noted that the bill would expand coverage to 31 million Americans (94 percent), leaving approximately 23 million uninsured ( Senate Democrats, 12/19 ; Kaiser Health News, 12/24 ). The bill would: Require most Americans to purchase health care coverage beginning in 2014 Include mental health and substance abuse services in all benefit plans with coverage equal to physical health care Expand Medicaid enrollment to non elderly Americans earning up to 133 percent of the federal poverty level (FPL) in 2014 Create state based insurance exchanges to include plans managed by the Office of Personnel Management (OPM), similar to the Federal Employee Health Benefits Program (FEHBP), and offer subsidies for individuals earning up to 400 percent of the FPL Impose fees on employers with 50 or more employees whose employees receive federal insurance subsidies Maintain the Children222s Health Insurance Program (CHIP) through 2019 and fund it through 2015 Prohibit insurers from denying coverage to individuals with pre existing conditions, cancelling coverage due to illness, or creating annual or lifetime coverage limits Require insurers to spend at least 80 percent of premium revenue on medical care for large groups and 85 percent for small groups Reduce payments to Medicare providers Impose a 40 percent excise tax on 223Cadillac224 health plans with yearly premiums over $8,500 for individuals and $23,000 for families Increase Medicare payroll taxes on individuals earning over $200,000 and couples earning over $500,000 annually ( Senate Democrats, 12/19 ; APA via PRNewswire, 12/24 ; Kaiser Health News, 12/24 ; CQ Politics, 12/24 ; Reuters, 1/5 ; Kaiser Health News, 12/20 ). Aspects of the compromise bill have drawn sharp criticism, including provisions increasing Medicaid payments to Massachusetts, Vermont, and Louisiana and a provision negotiated by Senator Ben Nelson (D NE) for the federal government to pay 100 percent of the cost of Nebraska222s Medicaid expansion in perpetuity ( Kaiser Health News, 12/23 ). Twelve Republican attorneys general, later joined by one Democrat, authored a letter to Congressional leaders seeking the removal of the provision; however, Senator Nelson indicated that he hopes to secure similar federal funding for all states rather than eliminating Nebraska222s deal ( Birmingham Business Journal, 12/31 ; Kaiser Health News, 1/5 ; Kaiser Health News, 1/7 ; Kaiser Health News, 1/7 ). Meanwhile, Senior Congressional Democrats, President Barack Obama , and White House officials met throughout the week to discuss merging the Senate bill with the House222s health care reform bill ( HR 3962 ). Congress will likely skip the formal conference process, instead negotiating an informal agreement between Democratic leaders to avoid preliminary delays from Senate Republicans ( Washington Post, 1/8 ; Kaiser Health News, 1/7 ). Under the informal conference process, the House will vote on an amended version of HR 3590 and send the legislation to the Senate for approval, repeating the process as SAMHSA222s Weekly Financing News Pulse: National Edition January 8, 2010 1/8/10 3 needed until both houses approve the same version of the bill ( CQ Politics, 1/4 ; Kaiser Health News, 1/5 ; Kaiser Health News, 1/7 ). Additional details on HR 3590222s provisions are available through the Kaiser Family Foundation222s (KFF) interactive health care reform tool . Update: President Signs Bill Extending ARRA COBRA Subsidy, Temporarily Freezes Medicare Physician Reimbursements: On December 19, President Obama signed the Department of Defense Appropriations Act for FY2010 ( HR 3326 ), which included a provision to expand the 65 percent COBRA subsidy originally passed as part of the American Recovery and Reinvestment Act (ARRA) and temporarily delay a scheduled 21 percent Medicare physician reimbursement reduction. The original ARRA COBRA provision provided a nine month, 65 percent COBRA subsidy to employees laid off before December 31, 2009. HR 3326 expands the subsidy period from nine to 15 months, applying retroactively to those whose eligibility has already expired, and extends the enrollment cutoff point for COBRA subsidies through February 28, 2010. In addition, the bill delays a 21 percent cut in Medicare physician reimbursements previously scheduled to take effect January 1. It defers the cuts until February 28 while Congress considers numerous 223Doc Fix224 proposals that would permanently alter the sustainable growth rate (SGR) formula used to calculate the payments ( Washington Post, 12/24 ; McKnight222s Long Term Care News & Assisted Living, 12/23 ; Kaiser Health News, 12/22 ; Kaiser Health News, 1/5 ). HUD Awards $1.4 Billion in Homelessness Assistance Grants, Funds Some Behavioral Health Care Services: On December 23, U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan announced the distribution of $1.4 billion in Continuum of Care grant funding for programs aimed at reducing homelessness. The grants, which will fund 6,445 programs nationwide, provide access to permanent and transitional housing, job training, health care, mental health counseling, substance abuse treatment, and childcare. Details of local HUD grants awards are available here ( HUD, 12/23 ; Hartford Courant, 12/25 ). Rep. Hastings Introduces Bill Requiring Medicare to Reimburse PHPs for Food and Transportation: Rep. Alcee Hastings (D FL) introduced the Outpatient Mental Health Modernization Act of 2009 ( HR 4373 ) on December 16 as House companion legislation to the Senate222s SB 1522 , introduced by Senator David Vitter (R LA) in July. The bill would require Medicare would reimburse behavioral health partial hospitalization programs (PHPs) for transportation, food, and nutritional services and create a Behavioral Health Advisory Committee to provide recommendations for improving the behavioral health care system ( American Chronicle, 12/20 ; THOMAS). House Passes Jobs for Main Street Act, Includes Increased Funding for Medicaid and COBRA: The House passed the Jobs For Main Street Act of 2010 ( HR 2847 ) on December 16 to fund infrastructure development and public sector jobs and enhance ARRA health care programs. The bill would allocate $23.5 billion to extend the Medicaid Federal Medical Assistance Percentage (FMAP) increase under the ARRA until June 2011 and $12.3 billion to extend the eligibility date for ARRA COBRA subsidies to June 30, 2010. The Senate will take up the bill when it reconvenes January 19 ( CNN, 1/6 ; House, 12/16 ; NCSL, 12/17 ). VA Delays Drug Copayment Increase Until July: The U.S. Department of Veterans Affairs (VA) announced that it will delay a planned copayment increase for outpatient prescription medication treating non service related conditions. The VA said the delay, which postpones an increase from $8 to SAMHSA222s Weekly Financing News Pulse: National Edition January 8, 2010 1/8/10 4 $9 until July 1, will allow staff to consider how increases are calculated. The additional $1 was intended to keep VA prescription drug charges inline with private sector costs ( Army Times, 1/4 ; Kaiser Health News, 1/5 ). Studies Released CMS Study Finds Health Care Spending Growth Rate Dropped in 2008: A CMS study published in Health Affairs found that the U.S. health care spending growth slowed to 4.4 percent in 2008, the lowest rate in fortyeight years. However, despite the slower growth rate, health care spending reached $2.3 trillion in 2008 and continued to grow as a portion of the Gross Domestic Product (GDP), increasing from 15.9 percent of the GDP in 2007 to 16.2 percent in 2008. The authors note that, despite the slowed growth rate, increases in spending continue to outpace the growth in available resources. Finally, the report also examines health care spending by payer, noting that the federal share of spending grew nearly twice as fast as total health care spending ( New York Times, 1/5 ; New York Times, 1/4 ; Bloomberg via Business Week, 1/5 ; Kaiser Health News, 1/5 ). Secretary Sebelius Released Report Highlighting the Benefits of Health Care Reform: On December 18, HHS Secretary Kathleen Sebelius released a report outlining the effects of health care reform legislation on health care costs and health plan choice. The report explains major provisions of health care reform and notes that a 1 percent drop in health care costs will also improve the economy, increasing median family income $6,800 by 2030 and creating 320,000 new jobs ( HHS, 12/18 ). GAO Examines Conversion of Medicare Managed Care Cost Plans to MA Plans: As required under the Medicare Improvements for Patients and Providers Act of 2009 (MIPPA), the Government Accountability Office (GAO) conducted a review of the conversion of Medicare cost plan enrollees into Medicare Advantage (MA) plans. Medicare cost plans are managed care plans that CMS reimburses based on the reasonable costs of provided services; in contrast, Medicare Advantage (MA) plans, though also managed care plans, receive fixed per enrollee payments and assume the financial risk of cost overruns. Under current law, cost plans may exist only if there are no MA plans with sufficient enrollment in the same area. The GAO found that, as of June 2009, beneficiaries enrolled in all 22 cost plans had multiple MA plans available to them. The GAO also found that cost plans had higher than average quality scores and offered lower out of pocket costs for beneficiaries with poorer health. Additionally, the report documented cost plan managers222 concerns about the transition to the MA system ( CCH Health Care, 1/1 ). Hewitt Analysis Finds High COBRA Enrollment Rate Among Subsidy Eligible Employees: A new analysis , released by Hewitt Associates on December 23, found that average monthly COBRA enrollment rates among ARRA subsidy eligible employees increased 20 percent since the ARRA subsidies were enacted in March 2009. Hewitt222s analysis examined 200 large U.S. companies between March and November 2009, finding that COBRA enrollment rates among subsidy eligible employees averaged 39 percent, compared to a 19 percent enrollment rate in the corresponding period prior to the subsidies. The Hewitt analysis also presents COBRA enrollment data by industry ( Hewitt, 12/23 ; Life and Health Insurance News, 12/30 ). KFF Report Examines Medicaid Financing Alternatives: A KFF report published December 11 finds that allocating the increased federal Medicaid funding proposed under the Congressional health care reform bills ( HR 3590 , HR 3962 ) using the current Medicaid funding system would perpetuate SAMHSA222s Weekly Financing News Pulse: National Edition January 8, 2010 1/8/10 5 inequalities in the system. Their analysis of alternative distribution systems finds that increased federal funding under the proposed system would create higher costs and coverage in the south and west, compared to the northeast and Midwest.Instead, KFF recommends shifting Medicare expenses for dual eligibles to the federal government, increasing matching rates for certain services, and targeting funds to states with large increases in new enrollment. The authors suggest that such alternatives would be less complex and reduce inequality. The report also provides state level data on the effects of the potential Medicaid funding systems ( KFF, 12/11 ; Kaiser Health News, 12/18 ). Exchanges an d Individual Subsidies will Reduce Small Business222 Health Care Costs: A joint Robert Wood Johnson (RWJF) Urban Institute report , published December 16, examines the effects of House ( HR 3962 ) and Senate ( HR 3590 ) health care reform bills on small employers222 disproportionately higher health insurance premiums. The report finds that the health insurance exchanges proposed in both bills, as well as the federal subsidies for lowincome individuals, will have the largest benefit for small businesses.In addition, the report notes that employer tax credits are likely to have only modest short term effects ( RWJF, 12/16 ; Kaiser Health News, 12/18 ). Around the Hill: Hearings on Health FinancingCongress is currently out of session. The Senate reconvenes January 19 for a pro forma session and The House reconvenes January 12.
