Will House Republicans Successfully Repeal the Medicare “Doc Fix” Law?

Feb 13 (Reuters) – Republicans in the U.S. House of Representatives will seek a permanent solution to scheduled steep cuts in physician payments from the federal Medicare health insurance plan for retirees and disabled people, a House committee chairman said on Wednesday.

Rep. Fred Upton, chairman of the House Energy and Commerce Committee, told doctors he hopes to send so-called “Doc Fix” legislation to the House floor this summer that would repeal payment reductions enacted in 1997 as part of a law to balance the federal budget.

The 16-year-old “sustainable growth rate” (SGR) provision calls for reductions in doctor pay as a way to control spending by Medicare. Congress has prevented the SGR from taking effect through temporary measures, but that has run up the fiscal and political costs of finding a permanent solution.

U.S. Doctors have voiced frustration about uncertainty caused by the persistent threat of steep reductions in Medicare reimbursement for their services. Some have even threatened to stop serving Medicare patients.

Upton said he believes the nonpartisan Congressional Budget Office has opened “a window of opportunity” for change. The budget office recently lowered its cost estimate for a long-term SGR fix to $138 billion, from $245 billion last August, due to lower Medicare spending on physician services.

“It’s obviously a very large amount but a smaller mountain to climb,” the Michigan Republican said in a speech to the American Medical Association (AMA).

“Our goal is to get it done this year, to actually have it on the House floor before the end of the summer — July or the first week of August.”

Upton said he would seek support from Democrats in the Republican-controlled House to achieve a bipartisan bill that could muster support in the Democratic-run Senate.

He offered no specifics on how his bill would pay for the cost of repealing the SGR.

In the latest episode of the cat-and-mouse game, physicians escaped a 27 percent reduction in Medicare payments scheduled for Jan. 1, 2013, when Congress enacted a one-year $25 billion Doc Fix as part of its fiscal cliff legislation. The measure holds physician payments unchanged.

Upton and other leading Republicans on his panel have released a legislative blueprint that calls for freezing doctor payment rates for 10 years and basing future increases on their willingness to embrace methods to improve the quality and efficiency of care.

A bill introduced this month by House Democrat Allyson Schwartz and Republican Joe Heck would allow four years of payment increases while new payment and delivery models are vigorously tested.

An AMA proposal calls for a similar transition period, during which physicians would be rewarded for participating in new methods of care delivery.

Obama names Marilyn Tavenner as new CMS Chief.

President Obama nominated Marilyn Tavenner to run one of the biggest agencies in the federal government today, the Centers for Medicare and Medicaid Services (CMS). If it were anyone else it might be a big deal, however, Ms. Tavenner has been running the department for more than two years as the acting Deputy.

If recent history is any indication, the nomination won’t matter.

Not that being the head of CMS isn’t a big deal. It is. The agency has a massive budget that dwarfs the DOD, oversees Medicare, Medicaid, and the Children’s Health Insurance Program. Plus, the agency is the tip of the sword on Obama’s health care reform law, the Affordable Care Act.

Tavenner’s nomination is of little consequence because she already has the job. She’s been running the agency since December 2011 after Donald Berwick, M.D., quit the post. It’s not likely a Senate confirmation hearing will be held to confirm Tavnner. After all, the Senate hasn’t bothered to vote on a CMS nominee since Mark McClellan left the agency all the way back in October 2006.  For more information on why this important agency hasn’t had a confirmed leader for over six years and why that matters, read this article from Politico.

Marilyn Tavenner served as Principal Deputy Administrator of CMS since February 2010 and as Acting Administrator of CMS from February to July 2010. Previously, Ms. Tavenner served as the Commonwealth of Virginia’s Secretary of Health and Human Resources in the administration of former Governor Tim Kaine. Ms. Tavenner also spent nearly 35 years working with health care providers including almost 20 years in nursing, three years as a hospital CEO and 10 years in various senior executive level positions for Hospital Corporation of America (HCA). She has served as a board member of the American Hospital Association and as president of the Virginia Hospital Association. Ms. Tavenner holds a B.S. in nursing and an M.A. in health administration, both from the Virginia Commonwealth University.

Medicare Spending Slowing Ahead of Projections

The Congressional Budget Office (CBO) lowered its spending projections for Medicare earlier this month. The watchdog agency noted that Medicare’s expenses have been “significantly lower” than estimated for three straight years. The CBO revised its 10-year spending projections for the program down by $137 billion in its latest long-term economic forecast. That’s a two percent drop.

The report noted that spending on Medicare Parts A and B (hospital and doctor insurance) increased by an average of 2.9 percent per year since 2009. This is a significant downward trend compared to the 8.4 percent annual growth seen between 2002 and 2009.

“In recent years, healthcare spending has grown much more slowly both nationally and for federal programs than historical rates would have indicated,” the CBO wrote. The CBO previously attributed the slowdown to the recovering economy and “structural factors” in the healthcare system, however, supporters of the new ObamaCare law insist its reforms are the reason for the slower cost growth.

The latest CBO report also forecasts a 5.5 percent decrease in Medicaid spending between 2013 and 2022 compared with estimates made in August, 2012. The CBO explained that Medicaid spending per person is expected to go down as a result of the Affordable Care Act’s extension of eligibility to healthier adults. The CBO also predicts that Medicaid will see fewer enrollments than previously estimated.

ACA Cuts Cause Doctor Practices to Flee From Medicare

As Medicare chips away at what it will pay healthcare providers, 1-in-10 doctors say they who own their own practices will start direct pay or concierge medicine in the next one to three years. This new data comes from a national survey of nearly 14,000 physicians by physician staffing firm Merritt Hawkins. Analyzing 2012 practice patterns, Merritt Hawkins found that 9.6 percent of practice owners plan to convert to concierge practices in the next one to three years.

The movement is across all medical disciplines with 6.8 percent of all physicians planning to go into the “direct primary care” business and stop taking insurance.
“Physicians have been running for cover for several years now,” according to Mark Smith, president of Merritt Hawkins. “There is a lot of uncertainty in health care now and the only certainty is there is a lot of talk about cutting physicians fees. One way to get out of it is to go off the grid.”

The new report comes a few weeks after the so-called “doc fix” on Medicare payments in the fiscal-cliff negotiations by Congress. Although a 27 percent slash in Medicare payments to doctors was avoided, doctors continue to be disappointed that a permanent solution to the dramatic cuts is not in the offing. Under the sustainable growth rate (SRG) provisions of ObamaCare, doctor payments from the Medicare health insurance program are dropping at an alarming rate. The cost-saving measure is part of the more than $700 billion in cuts that helps fund the Affordable Care Act over the next ten years.

Approximately one in five physicians say they are restricting the number of Medicare patients in their practice. This figure drops to one in three primary care doctors, according to a 2010 AMA survey of more than 9,000 physicians who care for Medicare patients.

Under the direct primary care model attracting physicians away from Medicare payments, doctors contract directly with their patients. The services are free of insurance interference and can be offered at rates that average $50 to $60 per patient per month. The New York Times coined the new model “concierge for the masses” because it’s cheaper than the high cost of concierge medicine that Congressional investigators found to be $5,000 to $15,000 a year.

“If you can afford a gym membership, you can afford this kind of care,” Merritt Hawkins’ Smith said. The direct primary care model allows unlimited office visits and e-mail access to physicians for consultations. The primary care model cuts out the health insurer middleman, drawing heavy opposition from the insurance industry, including Aetna, Humana and UnitedHealth Group.

A proposal under consideration by Congress supports a pilot program that will provide monthly fee-based payments for direct primary care medical homes used by some Medicare beneficiaries. Supporters of the direct primary care approach, including Rep. Bill Cassidy, the Louisiana Republican and physician who introduced the legislation, see the pilot as a way to show Congress that the concept can provide quality medical care and lower Medicare costs.

New KHN Poll Shows Americans Support ACA and Medicare Expansion

A new public opinion survey on the Affordable Care Act (ACA), Medicare and Medicaid, by the Kaiser Family Foundation, is packed with new findings. Americans overwhelmingly support the ACA and its proposed build out of health exchanges. The following points highlight the report from the survey.

  1. Americans have mixed feelings about the ACA, but they support implementation of the law’s core components.
    • 86% of Americans say that “creating a health insurance exchange or marketplace” is an important or top priority.
    • 65% say that “expanding Medicaid” is a top or important priority.
  2. Americans want to protect Medicare, Medicaid and the ACA’s insurance subsidies, despite the federal deficit issues.
    • In all, 52% want to “expand Medicaid to cover more low income people” versus 42% who want to “keep Medicaid as it is today.” Six in ten Americans say Medicaid is important to their own family, with 38% calling it “very important.”
    • Although most Americans want to reduce federal spending and the budget deficit, 91% want limited reductions in Medicare, 83% want the same for Medicaid, and 74% have the same mindset about the ACA’s health insurance subsidies.
    • 60% of those surveyed agree that “Medicare is working well,” including 80% of seniors.
    • Only 24% believe that Medicare “is not working well”, including 15% of seniors.
    • 75% of respondents believe the budget deficit can be addressed without changing Medicare.
    • 51% of respondents oppose raising the age of Medicare eligibility from 65 to age 67.

The survey offers additional interesting fact regarding American opinions on obesity, diabetes, and AIDS/HIV.

Inept Agency Pays Millions in Medicare Benefits to Illegals and Inmates

Illegal U.S. residents and inmates are the latest wave of fraudulent Medicare beneficiaries. According to two new reports from the HHS inspector general, from 2009 to 2011 the government paid out more than $120 million in Medicare services to illegal aliens and prison inmates, despite federal laws that makes them ineligible.

The new HHS reports claim it’s a timing issue. By the time Medicare is alerted that someone receiving Medicare benefits is incarcerated or undocumented, the payment is already out the door. According to the report, Medicare’s databases aren’t up to date, exacerbating the improper payment problem. Adding insult to the situation, the Medicare program lacks the capability to get the money back.

The Medicare fraud, waste and abuse news comes just as President Obama told the Congressional Hispanic Caucus that immigration reform would be one of his top priorities. However, he made no mention of how he would address problems the Medicare and healthcare reform problems in the immigrant community.

Upwards of 3,000 illegal immigrants made $91.6 million in claims over the three year period studied in the report. In the same period, 135,000 or more Medicare beneficiaries were incarcerated. About 11,600 inmates submitted claims totaling $33.6 million.

The Office of the Inspector General said that retrieving the money is not feasible, claiming that “[CMS] is committed to recovering overpayments … but it must take into account the cost benefit of recoupment activities, including potential appeal costs and the cost of manually reopening these claims.”

CMS responded to the reports by saying that it would agree to identify improper payments and find ways to try to get the money back in the future. There was no pledge by the agency to recover the money already improperly paid.

New ObamaCare Taxes for Medicare Hit American Workers

by Frank Byrt

The American Institute of CPAs (AICPA) hosted a conference call January 17 to discuss compliance and planning issues surrounding the new 3.8 percent Medicare surtax that kicks in this year.

The panelists noted that the new regulations are complex and incorporate 150 pages of rules under the new law, the Patient Protection and Affordable Care Act, which went into effect on January 1. The additional tax provisions come as part of the Health Care and Education Reconciliation Act of 2010, which was ruled constitutional by the Supreme Court last June.
The discussion focused on issues tax return preparers need to be aware of that will result in changes and additional tax for high-income taxpayers. This includes increases in tax on earned and unearned income in 2013.

Beginning with the 2013 tax year, under Section 1411 of the tax code, a new 3.8 percent net investment income tax (NIIT) on unearned income will apply to all taxpayers whose income exceeds a certain “threshold amount,” which is $200,000 for individuals and $250,000 for married couples filing jointly. This new NIIT will raise the marginal income tax rate for affected taxpayers in some instances to the 39.6% tax bracket to a marginal rate of 43.4%.

Estates and trusts will also be subject to the NIIT if they have undistributed net investment income and also have adjusted gross income over the dollar amount at which the highest tax bracket for an estate or trust begins for such taxable year. The threshold amount was $11,650 in 2012.

Also, beginning in the 2013 tax year, individual taxpayers with earned income in excess of $200,000 or $250,000 if married filing jointly, will have to pay an additional 0.9% in Medicare taxes on earned income above these levels. Previously, workers paid a flat 1.45% of their wages into Medicare.

About the author: Frank Byrt is an Analyst/Reporter for theStreet.com covering the financial markets, mutual funds and economics.

Seniors, are you ready for the ObamaCare cuts to your Medicare?

If you were paying attention during the election season it was hard to miss the opposition’s battle cry: ObamaCare cuts the Medicare budget by $716 billion. What does this mean for the average Medicare beneficiary? What does this mean to you?

In 2013 most Medicare recipients will see few changes. The shrinking Part D doughnut hole is underway, there are a couple more wellness benefits, and your Part B premium went up a few dollars. That is, unless you’re wealthy, in which case your Part B premium skyrocketed. ObamaCare now considers seniors earning more than $80,000 per year as being privileged, so you get to pay more for your healthcare.

If it seems like seniors got though unscathed, prepare yourself. The real impact won’t be felt until 2014. That’s when the effects of the cuts to federally funded programs like Medicare Advantage will start to be felt.

In what seems like a cruel joke, in his first administration President Obama heavily funded private insurers to boost the quality and enrollment in the Medicare Advantage program. In 2014 the Affordable Care Act (ACA) swoops in and takes the subsidy away.

The original aid package did its job. As much as 30 percent of seniors with Medicare have a 2013 Advantage plan that offers better healthcare with less risk of high medical bills. The bad news for taxpayers is that it costs the government about 14 percent more to have seniors on Medicare Advantage than it does Original Medicare. Going forward, lower Advantage plan subsidies are pegged squarely on quality.

What do the looming cuts mean for you if you have a Medicare Advantage plan? From the insiders I’ve spoken with there are three big changes coming down the tracks: premium increases, benefit reductions and fewer plan choices.

In addition to subsidy cuts, the ACA mandates that insurers pay out 80 percent of the premiums received in direct health benefits. This seems like a smart regulation, but it will have a massive impact on regional insurers that are unable to mitigate their financial risk and show a reasonable return for shareholders. In other words, only the non-profits (e.g., Blue Cross and Blue Shield organizations) and the industry giants (e.g., UnitedHealthcare, Aetna, Cigna, Kaiser, etc.) will be able to maintain competitive rates in this arena.

You might be thinking that none of the budget cuts affect you because you don’t use Medicare Advantage. For you, there’s an even bigger surprise coming.

Starting in January, 2014, millions of Americans that do not have health insurance today will suddenly qualify for Medicaid. Millions more will qualify for subsidized HMO and PPO plans through the state and federal health insurance exchanges (HIX). This is expected to create a flood of new patients that will overwhelm healthcare providers.

To understand how this affects those with Original Medicare, you need to understand the capitation process of the managed care industry. Capitation is a payment arrangement for healthcare service providers such as physicians or nurse practitioners. It pays a physician or group of physicians a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. It’s a great way for providers to manage their budgets and their workload.

What this means for Original Medicare patients is that they will have less access to doctors. People with private insurance, including Medicare Advantage, will have better access because doctors are under contract to provide them care. As a result, it is anticipated that more and more doctors will simply stop accepting new patients with Original Medicare due to their workload.

The changes brought about by the ACA are exactly why the health insurance industry came out in full support of ObamaCare. For the health insurance providers, the subsidy cuts to the Medicare Advantage program will cause a short-term revenue dip followed by a huge, long-term gain. The net result is that seniors with Medicare Advantage will have access to the best healthcare available while all others will be stuck in long lines or never receive the care they need.

In a future blog post I will talk about how the government is looking to further limit your access to healthcare if you have a Medigap plan.

ObamaCare Rejected! States Refuse To Implement. No Impact on Medicare.

States were given until until 14 December, 2012 to decide if they would build a health insurance exchange (HIX) or defer to the federal government. The health insurance exchange system is central to the government’s ability to provide regulated health insurance services to individuals if it’s not provided to them by an employer.

The deadline has come and gone, and the exchange concept was rejected by more than half of the states. They are simply refusing to participate in this crucial component of the Affordable Care Act law. So far, 18 states and the District of Columbia have plans to build and manage their own exchanges, while seven others have asked the federal government to create their exchanges.

The majority of the states carried by Mitt Romney in the 2012 presidential election refuse to build an exchanges. These states, generally speaking, would vote to repeal Obamacare. State leaders carefully listened to their constituents when they decided to say no to spending taxpayer money to build a HIX of their own.

It isn’t just the Romney states. States that President Obama carried in the election are also rejecting the plan. Most notably Florida, Ohio, Pennsylvania, Virginia, New Jersey, Wisconsin and New Hampshire said no. Is this politics or economics?

Earlier this month Texas Governor Rick Perry, who also nixed the idea of his state creating an exchange, said “The idea that you’ve got a state-instituted exchange, but it has to be federally approved. So the fact is the federal government’s going to have to run these,” Perry said. “And they don’t have the expertise, nor do they have the money.” Perry is just one of many governors predicting that the implementation of Obamacare is “going to be a disaster.”

Could this lack of state participation mean that states will not have access to health insurance plans by 1 October, 2013, as mandated by law?

The uncertainty of the exchanges raises serious the questions. Can Obamacare be fully implemented by 2014 when the individual mandate requires all citizens to have private health insurance? Given the enormity of building the complex system, gathering the massive amounts of data required, and gaining cooperation at the state level, it seems probable that failure or a serious delay is looming.

Is ObamaCare Headed for a Personal Privacy Disaster Worse than Medicare?

As we get ready to start the new year I have serious concerns. At the top of the list is personal privacy and the potential for fraud within the central system designed to implement the benefits offered by the Patient Protection and Affordable Care Act (aka, “ObamaCare”).

For decades seniors have complained about, and suffered from, the fraud that runs rampant through the Medicare program. At the root of the problem is a serious lack of security protecting social security numbers. Every year, tens of thousands of seniors fall victim to identity theft, and the tax payers get soaked to the tune of $60 million, or more. Regardless of the efforts by the Justice Department to round up the bad guys, the federal government has failed to deal with the root problem. The fraud persists.

Now, as the Health Insurance Exchanges (HIX) — the crown jewel of ObamaCare – speed towards opening day on 1 October, 2013, only a small number of states have their projects budgeted, staffed and making progress. Among the states plowing forward is California, with a history of massive project failures at the Health and Welfare Agency.

The fail-safe plan for the Department of Health and Human Services (HHS) is a centralized HIX system that will provide exchange services for the states that opt-out of developing their own (and the states that fail to create one successfully). Although HHS has experience creating large, web-based systems for the Medicare program (e.g., Medicare Advantage and Medicare Part D Drug Plans), this is the first time it will attempt to pull personal information about 300 million people from a myriad of agencies, including the IRS, Social Security Administration, Department of Justice, Department of Homeland Security, and the state tax boards.

The data gathering is sensible, in the abstract. Similar information is collected when you apply for a mortgage. But when the constantly updated information is combined in a central data hub, the potential for abuse is staggering. For one thing, the hub will have all the details needed to steal identities and fraudulently access credit.

The data gathering is necessary. Similar information is collected about you when you apply for a home loan. However, when constantly changing data is centrally maintained, the opportunity for abuse is mind blowing, and could make the Medicare fraud problem look like child’s play.

The new HHS central database will have all of the information the government needs to determine eligibility. That means it will have everything thieves need to steal your identity and fraudulently access your credit. Without the proper security measures in place, it’s a ticking time bomb.

With an incredibly short time frame to develop the federal health insurance exchange, is the data in the central database guaranteed to be secure? I sure hope so.