Last night, Sen. Baucus introduced a new substitute. This version of “Baucus 3.0″ makes changes when compared to “Baucus 2.0,” the substitute introduced last week on which the Senate failed to invoke cloture by a 56-40 vote. The new substitute DOES include the “doc fix” provisions passed separately by the Senate last Friday as H.R. 3962 – i.e., the six month SGR extension and its pay-fors (IRS-CMS data match and three-day payment rule among them).
The updated substitute extends the Medicaid FMAP assistance provided in the “stimulus,” while reducing the federal match levels. As a reminder, the “stimulus” provided two categories of enhanced federal funding: an across-the-board increase of 6.2% for all states, along with more targeted assistance focused on states with higher unemployment levels; in both cases the “stimulus” assistance expires on December 31, 2010. The Baucus substitute would extend the targeted unemployment assistance for a full six months (i.e. through June 30, 2011), while reducing the across-the-board increases – the increase provided to all states for January-March 2011 would be 3.2%, and the increase for April-June 2011 would be 1.2%.
Also of note, the substitute adds a new Section 526, to make inhalation, infusion, and injectable drugs not dispensed through retail community pharmacies subject to the average manufacturer price regime.
The latest text removes the emergency designation from the Medicaid FMAP increase, as well as the statutory PAYGO exemption from the “doc fix” provisions. Overall, the bill still increases the deficit by $33.3 billion, and the health subtitle increases the deficit by $17.5 billion.
After Sen. Baucus introduced his substitute, Sen. Reid filled the amendment tree and filed cloture on the measure. As a reminder, barring a unanimous consent agreement, a vote on cloture would occur on Friday, with a vote on passage 30 hours thereafter.
Medicare Physician Payment: Provides a 2.2% increase in reimbursement levels for June-November of 2010. The legislation also guarantees a further funding “cliff” this December, whereby Medicare payments would be cut by at least 21% absent further Congressional action. Spends $6.5 billion over five and ten years.
Medicaid Funding: Includes a six-month extension (through June 30, 2011) of increased federal Medicaid funding provided in the “stimulus.” Phases down the across-the-board increase in the federal Medicaid match, from the 6.2 percent in the “stimulus” through the end of calendar year 2010 to 3.2 percent in the first calendar quarter of 2011, and 1.2 percent in the second calendar quarter of 2011. The bill clarifies that states with Section 1115 waivers covering childless adults in effect as of December 31, 2009 qualify for meeting the “stimulus” bill’s maintenance of effort requirements. The bill also includes a new provision requiring that to obtain the additional six months of federal funding, state chief executive officers must certify “that the state will request and use such additional funds” – language which some may view as a politically motivated stunt. Spends $16.1 billion over five and ten years.
COBRA Subsidies: Extends for six months eligibility for COBRA subsidies for individuals laid off through November 30, 2010. The bill does not extend the length of the subsidy program beyond the current-law 15 months. The bill designates this spending as emergency appropriations for PAYGO purposes, although it will still add to the deficit. Raises the deficit by $6.9 billion over five and ten years.
IRS Data Match: Includes provisions allowing the IRS and CMS to co-ordinate data matching efforts with regard to delinquent tax debts owed by Medicare providers, and to take such information into account when releasing reimbursement payments and accepting new providers. These provisions were originally included in Section 1303 of the substitute amendment for the reconciliation bill (H.R. 4872), but were stripped out at the House Rules Committee due to Byrd rule concerns. Saves $175 million over five years and $425 million over ten, according to JCT.
Hospital Payments: Prohibits Medicare from reopening or adjusting claims made by hospitals during the three days preceding a patient’s inpatient admission. Saves $4.2 billion over five and ten years.
340B Program: Adds inpatient drugs to the 340B outpatient discount program, and maintains childrens hospitals’ ability to participate in the 340B discount program with respect to orphan drugs.
Health Law Clarifications: Repeals the health law’s delay of the revised skilled nursing facility prospective payment system, as well as the law’s extension of reasonable cost payments for certain laboratory services. Repeals section 6502 of the law, which requires states to exclude certain providers from Medicaid and SCHIP. Includes other clarifying amendments with respect to drafting errors in the health care law.
“Sweetheart Deal:” Provides $400 million to California to adjust Medicare fee schedule localities – funds that according to the text of the bill are available only to the state of California. Some may view this provision as providing a “sweetheart deal” to one specific state. Costs $400 million over five and ten years.
Average Manufacturer Price: Makes inhalation, infusion, and injectable drugs not dispensed through retail community pharmacies subject to the average manufacturer price regime. Saves $800 million over five years and $2.1 billion over ten.
Other Provisions: Extends for an additional year (through September 30, 2011) the Section 508 hospital reclassification program, at a cost of $300 million over five and ten years. Provides $175 million in mandatory appropriations to CMS to implement the act’s provisions. Includes clarifying provisions regarding eligibility for Medicaid health IT funding provided in the “stimulus,” and language preventing Medicare providers from un-bundling reimbursement requests. Includes language regarding affiliated hospitals and provisions in the health care law surrounding distribution of medical residency positions.