Today Senate Majority Leader Harry Reid released his “manager’s amendment” to the pending Senate health reform bill, the Patient Protection and Affordable Care Act (H.R. 3590). The amendment reflects a series of agreements negotiated with individual Senators in recent weeks, and its release sets the stage for a possible Senate vote on the underlying health reform measure by Christmas. Even if adopted, however, lawmakers will still face the difficult task of reconciling the differences between Senate and House approaches to health reform before a bill can reach President Obama’s desk.

The 383-page amendment makes changes throughout the legislation, including changes to provisions addressing various insurance coverage and market reforms, Medicare reimbursement policies, fraud and abuse authorities, and taxes, among many others. According to the Congressional Budget Office, the provisions of the manager’s amendment with the largest budgetary effects include:

  • Expanded eligibility for a small business tax credit;
  • Increased penalties on certain uninsured individuals;
  • Replacement of the proposed public health insurance plan with multi-state plans that would be offered under contract with the Office of Personnel Management;
  • Deletion of an increase in Medicare physician payment rates (which is likely to be addressed in a separate vehicle); and
  • Increased payroll taxes on higher-income individuals and families.

Other significant changes include:

  • Lowering the threshold for Medicare spending growth that would trigger recommendations for spending reductions by the Independent Payment Advisory Board;
  • Enhanced Medicare quality of care provisions (including the development of hospital and physician outcomes measures, the development of a framework for public reporting of provider performance information, pay-for-performance requirements for additional Medicare provider types, and value-based purchasing for ambulatory surgical centers);
  • Revisions to Medicare payment policy for a wide range of providers, including hospitals, home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, long-term care hospitals, and hospices; expanded Medicare Part D medication therapy management requirements; and an extension of the proposed date by which a physician-owned hospital must have a Medicare provider agreement to quality for the “whole hospital” exception to the Stark law's self-referral prohibition from February 1, 2010 to August 1, 2010;
  • Stronger health fraud enforcement provisions, including an extension of the federal health fraud statute to violations in which a person did not have specific intent to commit health fraud, revisions to the federal sentencing guidelines for federal health care offenses, and increased subpoena authority; and
  • Modifications to the proposed annual taxes on the medical device and health insurance industries.

Note that the CBO warns that certain Medicare cost-saving provision in the legislation “might be difficult to sustain over a long period of time.” The CBO expects inflation-adjusted Medicare spending per beneficiary under the legislation would increase at an average rate of less than 2% annually during the next two decades -- about half the rate over the past two decades. According to the CBO, “it is unclear whether such a reduction in the growth rate could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or would reduce access to care or diminish the quality of care.”

In other important health policy news, today the Senate joined the House in approving a short-term delay in the looming - and very large - Medicare physician fee schedule payment reductions caused by the application of the controversial sustainable growth rate (SGR) formula to the annual fee update. Specifically, H.R. 3326, the Department of Defense Appropriations Act for 2010, includes a provision that freezes Medicare physician rates at currents levels for January and February 2010, in lieu of the 21.2% cut scheduled to go into effect January 1, 2010. The legislation now goes to the President, who is expected to sign the bill into law. Note that lawmakers also are working on longer-range solutions to the Medicare physician fee schedule's SGR formula, but as the health reform debate drags out it is seen as increasingly unlikely that a more permanent fix can be adopted before the start of the new year.