$848 Billion House Bill Overview

Paying for payment reform

The House-passed Medicare physician payment reform bill would cost the federal government an estimated $210 billion over 10 years. Nearly $260 billion in higher pay would go to physicians and health plans to treat seniors and military members over that time. But beneficiaries would make up roughly $50 billion of that through higher premiums.

	Outlays in billions of dollars (fiscal year)
	Medicare physician fee schedule	Medicare Advantage and Tricare	Part B premium receipts	Total net changes
2010	$8.0	0	0	$8.0
2011	$13.7	$3.7	-$2.8	$14.7
2012	$15.0	$4.6	-$3.1	$16.5
2013	$16.1	$5.3	-$3.4	$18.0
2014	$17.4	$5.9	-$4.9	$18.3
2015	$19.0	$6.8	-$5.4	$20.4
2016	$21.3	$8.3	-$6.2	$23.4
2017	$24.3	$8.8	-$6.9	$26.2
2018	$27.6	$9.4	-$7.7	$29.3
2019	$32.3	$11.6	-$9.1	$34.7
2010-2019	$194.6	$64.4	-$49.4	$209.6

Source: Congressional Budget Office Cost Estimate on H.R. 3961Medicare Physician Payment Reform Act of 2009, Nov. 4 (www.cbo.gov/showdoc.cfm?index=10704)

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Senate plan for reform

Senate Democratic leaders unveiled their version of a health system reform bill Nov. 18, and the full Senate will begin debating the measure when lawmakers return from their Thanksgiving break. The bill would extend coverage to an estimated 94% of Americans at a projected cost of $848 billion over 10 years. It also would cut the deficit by an estimated $127 billion in its first decade. It includes proposals for:

• State health insurance exchanges by 2014 that residents could use to obtain coverage.
• A public health insurance option that allows individual states to opt out of participation.
• A requirement that most individuals obtain coverage by 2014 or pay a penalty.
• Affordability credits for those earning up to 400% of the poverty level.
• Medicaid eligibility expansion to 133% of the poverty level.
• New health insurance coverage and market reforms.
• Replacement of the 21.2% Medicare physician fee cut in 2010 with a 0.5% increase.
• A 40% excise tax on “Cadillac” health plans, as well as additional fees on health plans, hospitals, and drug- and device-makers.
• Higher Medicare payroll taxes for higher-income workers.
• A 5% excise tax on voluntary cosmetic surgical and medical procedures.
• A Medicare ban on new physician-owned hospitals.
• An extension through 2014 of the Medicare Physician Quality Reporting Initiative.
• A new federal Center for Medicare and Medicaid Innovation to test alternative payment and delivery models.
• A national, voluntary Medicare payment bundling pilot program.

It also includes more help for Primary Care in the form of an additional 1% over GDP.  The House Medicare pay bill sets a new spending growth rate target for physician services that would be equal to the gross domestic product plus 1%. Preventive care and evaluation and management services would have a separate target of gross domestic product plus 2%, allowing primary care pay to increase at higher rates over time.

Source: The Patient Protection and Affordable Care Act

It is important to note that this bill is unlikely to pass the senate in its current format.  We should know what the Senate will do in the next couple of weeks as they should finish before the Christmas holidays.

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