Today the Chairmen of the three House committees that share jurisdiction over health policy released their 852-page draft health reform bill. As expected, the legislation would create a public health insurance plan to compete with private insurers, with provider payments based initially on Medicare payment amounts. Other mechanisms to expand access to insurance include low-income subsidies, creation of a health insurance exchange, Medicaid expansion, and private insurance market reforms, coupled with mandates for individuals to purchase insurance and employers to contribute to health care costs (with certain exceptions). The bill also includes extensive Medicare and Medicaid policy changes affecting virtually every type of health care entity. Among many other things, the bill would:

  • Reform the physician fee schedule formula, including erasing cumulative shortfalls triggered by the current payment formula, establishing separate updates for evaluation and management and other types of services, and requiring review of potentially misvalued codes;
  • Reduce payments to hospitals for a preventable readmissions;
  • Bundle payments to hospitals and certain post-acute care providers (SNFs, IRFs, LTCHs, and HHAs) for services provided within 30 days of hospital discharge (the HHS Secretary would be required to study how the readmission policy also could be applied to physicians), and require the HHS Secretary to develop a detailed plan to reform Medicare payment for post-acute care services;
  • Reduce Medicare reimbursement for imaging services by increasing equipment utilization factor for advanced imaging from 50% to 75% and increasing the multiple imaging procedure technical component discount from 25% to 50% for second an subsequent imaging study on same patient same day;
  • Reduce inflation updates for a variety of providers, revise the skilled nursing facility payment methodology, and incorporate productivity improvements into market basket updates for several types of providers;
  • Limit the "whole hospital" exception to the Stark law's self-referral prohibition to those hospitals with physician ownership or investment on January 1, 2009, and add significant new conditions to that exception for existing hospitals with physician ownership;
  • Reform graduate medical education payments;
  • Reduce Medicare Advantage payments;
  • Expand drug rebates in a number of ways (increase the Medicaid drug rebate amount for brand-name drugs from 15.1% to 22.1% of the average manufacturer price, apply the additional rebate to new drug formulations, allow rebates on drugs provided through Medicaid managed care organizations, and require drug manufacturers to provide rebates for certain full premium subsidy eligible individuals under the Part D drug program);
  • Expand penalties for various types of health care fraud and abuse, including penalties for hospices that demonstrate substandard quality of care;
  • Gradually phase out the Part D coverage gap ("donut hole");
  • Establish an accountable care organization pilot program;
  • Expand comparative effectiveness research;
  • Require reporting of financial relationships between drug and device manufacturers and physicians (with a limitation on the deductions for advertising for failure to file required transparency reports); and
  • Disclose nursing home ownership information and address other nursing home quality issues.

The three House committees -- Ways and Means, Energy and Commerce, and Education and Labor Committees -- have scheduled hearings on the legislation next week, with committee voting expected in July.