On March 18, 2010, House Democratic leaders released their final health reform “reconciliation” bill, containing a series of changes to H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), as passed by the Senate on December 24, 2009 (H.R. 3590). According to the Congressional Budget Office analysis of the House reconciliation proposal, when combined with the Senate-approved PPACA, the legislation would provide health insurance coverage to 95% of Americans (excluding unauthorized immigrants) and reduce the federal deficit by a net $138 billion over the 2010–2019 period (compared to a net savings of $118 billion under the PPACA alone). The 153-page reconciliation document proposes numerous changes to the PPACA’s insurance coverage, Medicare, Medicaid, and revenue provisions (in addition to adding unrelated student loan reforms to the package), including the following:

  • Closing the Medicare prescription drug “doughnut hole” by providing a $250 rebate for all Medicare Part D enrollees who enter the coverage gap in 2010 and completely closing the doughnut hole by 2020;
  • Freezing Medicare Advantage payments in 2011, reducing Medicare Advantage benchmarks beginning in 2010, and creating Medicare Advantage quality incentive payments;
  • Modifying certain Medicare market basket updates, imaging payment cuts via increased equipment utilization assumptions, disproportionate share hospital (DSH) payment policies, and Stark law self-referral policies impacting hospitals with physician ownership or investment interest (including changing the date by which a physician-owned hospital must have a provider agreement to participate in Medicare to December 31, 2010 rather than August 1, 2010);
  • Providing federal Medicaid matching payments for costs associated with newly-eligible individuals, revising Medicaid DSH payments, and modifying the definition of new formulations of existing drugs for purposes of applying an additional Medicaid rebates;
  • Expanding certain fraud and abuse provisions; and
  • Restructuring proposed taxes on high-cost insurance plans, manufacturers of brand name pharmaceuticals and medical device manufacturers, and health insurance providers.

Congressional leaders still have not announced the specific procedures that will be used to pass the health reform bill, but it likely will involve the House using a parliamentary procedure to “deem” the Senate bill approved and adopt the reconciliation revisions in a single vote. The House vote still is considered too close to call, although it is looking increasingly likely that the House will have sufficient votes to approve this landmark bill. The Senate would not need to act again on the PPACA – that legislation would be cleared for the President’s signature – but the House reconciliation revisions would move to the Senate (although timing for Senate action is uncertain). Underscoring the importance of these next few days for the fate of health reform, President Obama announced today that he was cancelling a planned overseas trip in order to be on hand for the final legislative push. We will continue to report on health reform developments at http://www.healthindustrywashingtonwatch.com/.