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SAMHSA222s Weekly Financing News Pulse: National Edition June 4, 2010 6/4/10 1 SAMHSA222s Weekly Financing News Pulse: National Edition National News CMS Issues Guidance on Medicare Prescription Drug 223Doughnut Hole224 Program, Judge Rejects Federal Extension Request for Multistate Individual Insurance Mandate Lawsuit, HHS Misses Two Reform Implementation Deadlines House Republicans Introduce Bills to Repeal and Replace Health Refo rm Laws Poll Finds High Support for Repeal of Health Care Reform Law Tobacco Tax Loophole in CHIPRA Results in $250 Million in Lost Revenue for CHIP Obama Administration An nounces Formula to Allocate $400 Million in Extra Medicare Payments to Low - Cost Hospitals, NYT Analysis Projects Recipients Update: House Approves 19 -Month Delay of Medicare Physician Payment Reductions; CMS Temporarily Delays Reductions to Allow Senate Action Update: House Approves Defense Authorization Containing TRICARE Dependent Expansion, Veterans Scholarships for Advanced Behavioral Health Degrees Studies Released Com monwealth Fund Analysis Finds Health Care Reform Law will Reduce National Health Care Spending and Insurance Premiums EBRI Brief Finds Increase in CDHP Enrollment and Asset Value from 2006 to 2009 AJPH Study Finds High U.S. Prices for Brand Name Drugs not Correlated with Greater Innovation by U.S. Pharmaceutical Companies 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_subscribe.html?code=USSAMHSA&origin=http://www.samhsa.go v/enetwo rk/success.aspx For questions or comments, please contact Kevin Hennessy ( kevin.hennessy@samhsa.hhs.gov ). SAMHSA222s Weekly Financing News Pulse: National Edition June 4, 2010 6/4/10 2 National News CMS Issues Guidance on Medicare Prescription Drug 223Doughnut Hole224 Program, Judge Rejects Federal Extension Request for Multistate Individual Insurance Mandate Lawsuit, HHS Misses Two Reform Implementatio n Deadlines: On May 21, the Centers for Medicare & Medicaid Services (CMS) issued new guidance to Medicare Part D plan sponsors on the discount program scheduled to begin January 1 . Part of the national health care reform law, the plan is designed to provide relief for seniors that reach the Medicare Part D coverage gap , the 223doughnut hole224 . S tarting in 2011, manufactures will provide 50 percent discounts on brand name drugs as well as some generics for seniors in the coverage gap. The new guidance outlines the implementation of the program and explains the roles of Part D plan sponsors, drug manufacturers, and third party -administrative contractors. Under the proposed system, CMS will utilize third-party administrative contractors to coordinate drug manufacturers222 reimbursement s and verify the accuracy of the discounts reported by plan sponsors. Also on May 21, CMS released a draft model of the agreement drug manufacturers will sign to participate in the discount program. CMS officials expect all manufacturers of applicable drugs to sign the agreements. In addition, Part D will not cover drugs for which manufacturers do not sign discount agreements ( AIS Health, 6/2 ; Senior-Spectrum, 6/1 ). In other health care reform news, a federal judge rejected the federal government222s request for additional time to prepare a response to the 20-state lawsuit over the health care reform law222s individual insurance mandate. The judge cited the resources available to the federal government and the similarity of the suit to one filed by Virginia Attorney General Ken Cuccinelli (R) which that government addressed May 24 . The federal government must respond within 33 days of the amended complaint filed on May 14 ( Kaiser Health News, 6/2 ; Legal Newsline, 6/2 ). Finally, the federal government has missed two deadlines for implementation of health care reform measures . The government has not yet established a task force to assess and i mprove access to health care in Alaska or a task force on breast cancer, the deadlines for which were May 8 and May 23, respectively. U.S. Department of Health and Human Services (HHS) officials confirm that both panels are still in planning stages ( Kaiser Health News, 5/28 ; Politico, 5/28 ). House Republicans Introduce Bills to Repeal and Replace Health Reform Laws: On May 27, U.S. House Republicans introduced a bill ( H.R. 5424 ) to repeal the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 and replace them with a health care reform bill ( H.R. 4028 ) introduced by Republicans in November. The replacement bill would prohibit insurers from placing annual or lifetime spending caps on insurance plans; require states to use high -risk pools or state reinsurance programs to lower the costs for high -risk individuals; and reward states for reducing both premiums and the number of uninsured. The bill would also extend dependent coverage in group plans that cover dependents up to age 25, allow individuals to purchase insurance across state lines, and limit damages for medical malpractice suits. On the same day, Representative Ron Paul (R -TX) introduced a similar measure ( H.R. 5444) that would repeal the national health care reform laws, strengthen health savings accounts, allow for the purchase of insurance across state lines and the importation of prescription drugs, and establish tax credits for health spending. Both bills have been referred to committees and are considered unlikely to make it to the House floor ( Kaiser Health News, 5/28 ; The Hill, 5/27 ; California Healthline, 5/28 ; THOMAS ). Poll Finds High Support for Repeal of Health Care Reform Law : A Rasmussen Reports poll conducted in late May found that 60 percent of voters support repealing the n ational health care reform law while only 36 percent of voters oppose repealing it . The poll also found that 62 percent of voters believe that the law will raise the federal budget deficit and 58 percent believe it will increase the cost of SAMHSA222s Weekly Financing News Pulse: National Edition June 4, 2010 6/4/10 3 health care. Finally, the poll found that 54 percent of voters believe the law will be 223 bad for the country 224 while 36 percent believe it will be 223 good for Am erica224 ( Rasmussen Reports, 5/31 ). T obacco Tax Loophole in CHIPRA Results in $250 Million in Lost Revenue for CHIP: Public health officials announced that a tobacco tax loophole in the Children222s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) has cost the program $250 million in lost revenue. CHIPRA raised the tax on rolling tobacco from $1.10 per pound to $24.78 per pound to help fund the expansion of the Children222s Health Insurance Program (CHIP). However, many companies began labeling rolling tobacco as pipe tobacco to avoid the increased tax , instead paying the $2.83 per pound pipe tobacco tax . Before the ta x change under CHIPRA in March 2009, the pipe tobacco industry produced an average of 270,000 pounds of pipe tobacco monthly ; however, in March 2010 the industry produced two million pounds of pipe tobacco, suggesting a major labeling shift. Last year, th e Obama Administration said that it would release regulations clearly differentiating between the two varieties of tobacco but has yet to do so. On January 13, Representative Steve Cohen (D - TN) introduced a bill (H.R. 4439) to bring the taxes on the two types of tobacco to parity but that bill has not advanced out of committee ( AP, 6/2 ; Battle Creek Enquirer, 6/3 ; Kaiser Health News, 6/2 ). Obama Administration Announces Formula to Allocate $400 Million in Extra Medicare Payments to Low - Cost Hospitals, NYT Analysis Projects Recipients: The Obama Administration released the formula it plans to use to distribute $400 million in additional Medicare payments to low - cost hospitals under the national health care reform law. Over the next two years, t he government will make the payments to hospitals in counties with low per beneficiary Medicare spending. The New York Times (NYT) released an analysis of the formula on May 30, project ing that the $400 million will go to 4 15 hospitals in 273 counties nationwide. The analysis projects that New York, Virginia, Iowa, Wisconsin, Oregon, and Missouri will be the biggest recipients . New York will receive 12 percent, Virginia will receive 10 percent, Iowa will receive 8 percent, Wisconsin will receive 8 percent, Oregon will receive 6 percent, and Missouri will receive 5 percent. The analysis further suggests that Connecticut, Florida, Louisiana, New Jersey, and Tennessee will be among the states not receiving any additional funding ( New York Times, 5/30 ; Kaiser Health News, 6/1 ). U pdate: House Approves 19 - Month Delay of Medicare Physician Payment Reductions; CMS Temporarily Delays Reductions to Allow Senate Action : On May 28, the U.S. House approved a 19-month delay of the scheduled Medicare physician reimbursement reduction as part of the American Jobs and Closing Tax Loopholes Act of 2010. The bill would delay the scheduled 21 percent cut in Medicare reimbursement rates until 2012, increasing reimbursement rates by 2.2 percent for the remainder of 2010 and 1 percent for 2011. However, without further Congressional action, Medicare reimbursement rates would drop 33 percent in 2012 because the bill does not address the underlying formula . Because the U.S. Senate cannot take the bill up until returning from recess on June 7, the scheduled 21 percent reimbursement rate cut officially took place on June 1. However, CMS has placed a hold on Medicare claims for the first 10 business days of June to allow Congress additional time to address the legislation and prevent reimbursement reductions ( The Hill, 6/3 ; Kaiser Health News, 6/2 ). U pdate: House Approves Defense Authorization Containing TRICARE Dependent Expansion , Veterans Scholarships for Advanced Behavioral Health Degrees : On May 28 , the U.S. House approved the National Defense Authorization Act for Fiscal Year 2011 ( H.R. 5136), which contains an extension of TRICARE coverage for dependents up to age 26. The extension would apply only to SAMHSA222s Weekly Financing News Pulse: National Edition June 4, 2010 6/4/10 4 dependents that are not eligible for employer -sponsored coverage and would take effect October 1. The Congressional Budget Office (CBO) projects that the extension will cost $924 million over five years , assuming that the U.S. Department of Defense (DOD) subsidizes approximately 75 percent of the cost . An approved amendment to the bill also establishes a scholarship program for veterans to obtain advanced behavioral health degrees on the condition that they provide behavioral health services to other veterans for mandated period . The bill now goes before the U.S. Senate ( Coloradoan, 5/29 ). Studies Released Commonwealth Fund Analysis Finds Health Care Reform Law will Reduce National Health Care Spending and Insurance Premiums : On May 21, the Commonwealth Fund released a brief analyzing the impact of the national health care reform law on national health care expenditures an d health insurance premiums. The brief projects that , between 2010 and 2019, the law will reduce national health care spending by $590 billion and reduce average per -family annual health insurance premiums by nearly $2,000. The brief also estimates that the law could reduce the annual growth rate of national health care spending from 6.3 percent to 5.7 percent ( Kaiser Health News, 5/28 ; Commonwealth Fund, 5/21 ). EBRI Brief Finds Increase in CDHP Enrollment and Asset Value from 2006 to 2009 : On June 1, the Employee Benefit Research Institute (EBRI) released a brief examining the utilization and asset value of consumer driven health plans (CDHPs) from 2006 to 2009. The brief found that the number of CDHP accounts rose from 1.2 million in 2006 to 5 million in 2009. EBRI also found that the combined asset value of those accounts rose from $835.4 million in 2006 to $7.1 billion in 2009. The brief noted that enrollees in CDHPs were more likely to be young, single, higher -income, educated, and health y than were enrollees in traditional health plans ( PR Newswire, 6/1 ; EBRI, 6/1 ). AJPH Study Finds High U.S. Prices for Brand Name Drugs not Correlated with Greater Innovation by U.S. Pharmaceutical Companies: A study in the June issue of the American Journal of Public Health found that the higher prices U.S. consumers pay for brand name prescription drugs do not result in higher rates of new drug development by U.S. pharmaceutical companies. The study examined economic factors in countries that produce pharmaceuticals and all new drugs approved by the U.S. Food and Drug Administration (FDA) between 1992 and 2004 by country of origin. The authors found that the U.S. does not produce a disproportionate share of the innovation in the pharmaceutical market, even though U.S. consumers pay a disproportionate share of worldwide spending on prescription drugs . The study noted that many countries that utilize price controls on prescription drugs contribute significantly to the development of new pharmaceuticals, challenging the assumption that the lack of price controls in the U.S. leads to greater drug manufacturer innovation ( American Journal of Public Health, June 2010 ). Around the Hill: Hearings on Health Financing Congress is out of session for the Memorial Day recess. The Senate will reconvene Monday, June 7 and the House will reconvene Tuesday, June 8. House Veterans222 Affairs Subcommittee on Health : VA222s Recreational Therapy Services June 8, 8:30 a.m., site TBA, New Port Rich e y, FL SAMHSA222s Weekly Financing News Pulse: National Edition June 4, 2010 6/4/10 5 House Energy and Commerce Subcommittee on Health : Antibiotic Usage June 9 , 10:00 a.m., 2123 Rayburn Senate Veterans222 Affairs Committee : Veterans222 Claims Process June 16, 9:30 a.m., 418 Russel l House Veterans222 Affairs Subcommitte e on Health: VA Rural Health Issues and Technology June 24, 10:00 a.m., 334 Cannon
