On July 9, 2008, the Senate overwhelmingly approved H.R. 6331 "Medicare Improvements for Patients and Providers Act of 2008,” which rescinds a 10.6% cut in physician payments and delays a controversial medical equipment competitive bidding program, both of which went into effect July 1, 2008, and makes numerous other Medicare and Medicaid policy changes. The 69-30 Senate vote comes after a failed attempt to consider the bill just two weeks ago, and follows a 355-59 vote for the bill in the House of Representatives on June 24. While the White House has reiterated the President’s intention to veto the legislation, there are enough votes in the House and Senate to override a veto. Nevertheless, timing for enactment of the legislation remains uncertain.

The following are highlights of the legislation:

  • Physician Fee Schedule: The bill would maintain physician payment rates for 2008 (rather than implement the 10.6% cut that was triggered on July 1, 2009), and provide a 1.1% increase for 2009 (rather than the forecasted 5.4% cut). The bill also would extend for two years the Physician Quality Reporting Initiative (PQRI), increase incentive payments for reporting by 2%, and make other reforms to the program. The legislation would promote electronic prescribing (e-prescribing) by providing incentive payments for practitioners who use a qualified e-prescribing systems in 2009 through 2013, and reducing payments by 2% for providers practitioners who fail to e-prescribe beginning in 2011 (with limited exceptions). The bill also would require non-hospital advanced imaging providers to be accredited by 2012 and establish a voluntary demonstration program to test the use of appropriateness criteria for advanced diagnostic imaging services.
  • DMEPOS Competitive Bidding. The legislation would delay and reform the Centers for Medicare & Medicaid Services' (CMS) competitive bidding program for certain categories of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The first round of the program went into effect in 10 geographic areas on July 1, 2008. H.R. 6331 would terminate contracts awarded under round one and rebid those areas in 2009, with bidding for round two delayed until 2011. The delay would be financed by cutting fee schedule payments for all items covered by round one bidding program by 9.5% nationwide beginning January 1, 2009, followed by a 2% increase in 2014 (with certain exceptions). The legislation also includes a series of procedural improvements to the bidding process, and addresses quality by, among other things, requiring subcontractor accreditation, excluding complex rehabilitation wheelchairs and negative pressure wound therapy from bidding, and exempting of certain rural and low-population areas from bidding. Separately, the bill would repeal current oxygen equipment transfer of ownership requirements.
  • Therapy Caps Exception Process. The bill would extend through December 31, 2009 the exceptions process relative to the annual per-beneficiary limitations on outpatient therapy services.
  • Clinical Laboratory Services. The bill would repeal the competitive bidding demonstration project for clinical laboratory services and instead reduce the fee schedule update for clinical lab services by 0.5% in each of the next 5 years.
  • Medicare Advantage (MA) Provisions. The bill would make a series of payment and policy changes affecting Medicare Advantage plans, including a $1.8 billion cut in the MA stabilization fund for regional preferred provider organizations in 2012 and a phase-out of the adjustment for indirect medical education.
  • Medicare Part D Drug Plans. The bill would establish timeframes for plan payments to pharmacies and long-term care pharmacy submission of claims; codify current coverage of certain “protected classes” of drugs; clarify the use of Part D drug data for research and other purposes; limit certain sales and marketing activities; and make other Part D reforms.
  • End-Stage Renal Disease Provisions. The bill would provide a 1.0% update to the composite rate for renal dialysis services for 2009 and 2010, require the Secretary to establish a fully bundled ESRD payment system by January 1, 2011, and establish a quality incentive payment program for ESRD providers, effective January 1, 2011.
  • Medicaid Drug Reimbursement. The bill would delay the adoption of Medicaid payment based on average manufacturer price (AMP) for multiple source drugs and prevent publication of AMP data until October 1, 2009.

Additional details regarding the legislation are available on the House Ways and Means Committee web site.