Congress is back in session this week after a two week Easter recess. Both the House and Senate took up health care related bills this week. The Senate will vote on the House-passed budget, authored by Congressman Paul Ryan (R-WI), which seeks to cut $6.2T over 10 years by reducing the federal government’s role in both Medicare and Medicaid over time. The plan would create a “block grant” system for Medicaid where individual states receive a defined amount of funds each year to run their Medicaid programs without any additional federal regulation on covered benefits, eligibility requirements, etc. Such a policy could have a negative impact on O&P in future years as tight state budgets could lead to the elimination of funding for certain benefits or beneficiaries. Representative Ryan’s plan would also create “premium subsidies” for Americans under the age of 55 to purchase private insurance when they turn 65, rather than enroll in the current Medicare system. Subsidies would initially be set at $13,000 per year. Ryan’s budget would also fully repeal the Affordable Care Act, eliminating the medical device excise tax for O&P, but also eliminating insurance regulations like lifetime/annual coverage caps and preexisting condition exclusions seen as beneficial to our industry. Senate passage is seen as highly unlikely.
The House continued their assault on the Affordable Care Act passed last year by voting to repeal two provisions favored by the White House this week. The House voted to repeal the mandatory funding for states to create “state based health exchanges” on Tuesday 238-183. Eliminating funding for the health exchanges would seriously complicate individual states’ ability to create the exchanges by 2014, creating a vacuum likely to be filled by HHS. A second vote later repealed funding for “school-based health center construction”. The cuts are said to eliminate $14B in funding by 2021. While both provisions passed the Republican-controlled House overwhelmingly, they have little chance of advancing in the Democratically-controlled Senate. In other ACA repeal related news, the US Supreme Court has decided not to accept a plea from Virginia AG Ken Cuccinelli to fast track their appeal on the constitutionality of the Affordable Care Act directly to the Supreme Court this summer. The case will now proceed through the customary appeals court process before becoming eligible for Supreme Court consideration in 2012.
The Department of Health and Human Services also released several proposed rules and regulations over the past few weeks. CMS announced a cut in hospital reimbursements for next year, and also a shift from a reimbursement system that is based on quantity, to one based on quality of care provided by focusing on key quality metrics. Citing an increasing lack of access to health care for many low income and disabled Americans, CMS also detailed a proposed rule discouraging states’ from cutting Medicaid payments to providers. Cuts to Medicaid provider payments have been used by several states to close budget gaps, rather than cutting benefits like O&P, or cutting eligibility requirements; so this new policy further complicates efforts to get Medicaid budgets under control and could force states to look at cutting specific benefits if they cannot reduce payments to hospitals and other providers.
The main story in Congress over the next few weeks will continue to be deficit reduction, FY2012 budget plans and a vote on increasing the debt ceiling. Rising gas prices across the country could also mean energy policy could re-enter the national debate, with Republicans pushing for increased domestic oil drilling and Democrats pushing to eliminate subsidies to large oil companies that saw record profits in the first quarter.
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