Sen. Ted Kennedy (D Mass) returned briefly to the Senate floor tonight to vote in favor of ending Senate debate over the House version of the Medicare fix bill. The Senate voted in favor cloture and the House bill by a veto proof 69-30 margin.

The Medicare fix bill will avoid the 10.6% cut in Medicare reimbursement to doctors that was scheduled to take effect on July 1 and an additional 5% cut proposed for 2009. Instead doctors will receive a 1.1% bump in 2009. The Wall Street Journal notes that “But perhaps the bill’s most significant long-term effect: initially increasing Medicare payments to physicians who make the switch from hand-written prescriptions to digital ones, then docking doctors’ fees in later years if they fail to adopt the technology.” The newly merged SureScripts-RxHub applauded the change.

As this fix occurred within the freeze period administratively set by CMS, presumably there will be no Medicare secondary claims that require re-processing by FEHB plans.

The funding for the fix will come from cuts to the Medicare Advantage program. According to the AP,

The Congressional Budget Office projected that insurers would get about $13.5 billion less in Medicare payments over the next five years.Citigroup analyst Paul Heldman expects Humana, Aetna Inc. and Coventry Health Care Inc. to be hardest bit by the changes. All three companies have a large number of patients enrolled in Medicare Advantage plans targeted by the legislation. The payment reductions are not expected to take effect before 2010.

The Medicare fix bill also delays for 18 months a durable medical equipment competitive bidding initiative that the Centers for Medicare and Medicaid Services (“CMS”) currently have underway. HHS Secretary Mike Leavitt warned in a Wall Street Jounal op ed today “Make no mistake: “Delay” means “kill.” Killing this competitive-bidding program would cost taxpayers about $1 billion annually, while unjustly overcharging senior citizens.”On a related note, the New York Times reports today that

Congressional investigators said Tuesday that Medicare had paid tens of millions of dollars to suppliers improperly using identification numbers of doctors who died years ago. The government has no reliable way to spot claims linked to dead doctors, many of whom are still listed as active Medicare providers though they died 10 or 15 years ago, the Senate Permanent Subcommittee on Investigations said.

According to an AP report, “For the first time, an influential doctors group is recommending that some children as young as 8 be given cholesterol-fighting drugs to ward off future heart problems.”

• I hope that everyone is enjoying the 4th of July holiday weekend. OPM announced last week that on June 26 the agency established a working group with OPM’s Office of the Inspector General and develop steps to strengthen the controls and oversight of the FEHB Program.

• The New York Times reports today on the cost efficacy issues raised by use of Genetech’s blockbuster specialty drug Avastin.

• Congress returns from its break early this week. According to the Washington Post,
  
  

  Senate leaders plan to reprise a bill preventing a 10.6 percent cut in Medicare payments to doctors. It passed the House overwhelmingly in defiance of Bush’s threat to veto it, but fell just one vote short of the 60 it needed to advance in the Senate. Bush and Senate Republicans do not like offsetting cuts to insurance companies that use Medicare money to offer private health care coverage to about 20 percent of older people. The lower fees to doctors went into effect Tuesday. Medicare officials are holding off processing new claims, hoping Congress will act within the next couple of weeks to restore the higher payments.

  This bill also would delay Medicare’s durable medical equipment competitive bidding process for 18 months, even though the process kicked off last week. The Chicago Tribune explains that

  Five years ago, Congress decreed that Medicare should scrap its fee schedule and create an open, competitive bidding program for medical equipment such as oxygen tanks, wheelchairs and hospital beds. The reason is simple: When the government sets the rates for renting or buying that equipment, the prices soar—$4,023 for a powered wheelchair that carries an online price of $2,174, or $1,825 for a hospital bed that can be found on the Web for $754.

  On Tuesday, Medicare began a 10-city pilot project for medical equipment billing. That’s supposed to go nationwide in 2010. Based on preliminary bids, Medicare estimates it will save 26 percent over current costs. On some items it will save much more than that.

  But the trade association for medical equipment suppliers and other lobbyists have worked hard to derail this bidding program. The bill that would rescind the doctor’s pay cut would also delay the equipment bidding program for 18 months.

  The bill would cut payments to equipment suppliers by 9.5 percent—but that’s far less than Medicare anticipates it would save with honest market competition.

  The lobbyists argue that the bidding process was flawed and competition will create some job dislocations. Some companies won’t survive.

  That’s probably true: competition creates winners and losers. But Medicare is not going to get a handle on its rising costs by rejiggering its government-controlled pricing. As long as the anti-competitive provisions are in the bill, it will be bad for patients and taxpayers.

  Meanwhile, also on the Medicare front, CMS issued proposed rules last week on proposed 2009 changes to Medicare’s reimbursement methodologies for outpatient hospital care and physician care. While the proposed reimbursement cut to physicians would be overridden by the Medicare fix bill, the proposed rule’s changes to the Physician Quality Reporting Initiative (PQRI) are likely to be implemented.
  Finally, last month, the Medicare Payment Advisory Commission (MedPAC)
  released its June 2008 Report to the Congress: Reforming the Delivery System, which included support for the medical home initiative and bundling unrelated physician payments for certain chronic illnesses such as congestive heart failure.

BNA joins Business Insurance in reporting that the House and Senate negotiators have resolved all of the benefit policy issues that had distinguished their respective mental health parity bills. The House dropped its position that health plans must cover all mental illnesses identified by the American Psychiatric Association and adopted the Senate’s effective date (2010 if enacted this year). The House also agreed with the Senate to limit out of network parity to those plans that offer an out of network medical surgical benefit. Now the negotiators must resolve the “pay go” issues that had raised White House objections. I am betting that this bill will become law in 2008.

The Washington Post reports that “The nation’s two electronic prescription networks plan to announce today that they are merging in an effort to encourage the adoption of their technology by doctors and patients.” Interestingly, the merger is between “SureScripts [which] is owned by the National Association of Chain Drug Stores and National Community Pharmacists Association [and] RxHub [which- is owned by CVS Caremark, Express Scripts and Medco Health Solutions,” the leading mail-order pharmacies and prescription benefit managers.

• Congress recessed for the Fourth of July holiday without approving a Medicare doctor reimbursement fix bill. HHS announced that it will temporarily freeze Medicare doctor reimbursement rates according to the Washington Post. “Congressional aides said the freeze could last 10 days.”
• The IRS released additional health savings account/high deductible health plan guidance on June 25. “Notice 2008-59 contains over 40 new frequently asked questions and answers that cover a wide range of topics, including:

  • Who is an Eligible Individual;
  • Issues related to High Deductible Health Plans;
  • Contributions to HSAs;
  • Distributions from HSAs; and
  • Establishing an HSA.”
    

• The Baltimore Sun published an article last week comparing the Google and Microsoft personal health records systems.
• The Congressional Budget Office (CBO) released a report concluding that a Senate bill (S. 1695) creating a pathway to biogeneric drugs would generate over $25 billion in national healthcare savings over a ten year period.
• I discovered that the CBO Director also has a blog . The Director’s entry for today is about a front page New York Times article on the cost effectiveness of the uses CT scans to diagnose heart disease. The article points out the utility of creating an institute to study and report on the effectiveness of diagnostic and treatment procedures as many have suggested.

• The Markle Foundation’s Connecting for Health Program framework for protecting the privacy and security of electronic personal health records has gained the support of Microsoft, Google, WebMD, the American Medical Association, the Blue Cross Blue Shield Association, and American’s Health Insurance Plans (“AHIP”) according to a press release. According to an AP report,
  

  The new “Connecting For Health” guidelines aim to give electronic PHRs at least the same level of protection already governing paper medical records. The rules also call for patients to be notified in a “timely way” if their medical information is released by mistake, computer hacking or other mischief.

• AHIP’s Board of Directors released principles on the patient centered medical home concept.

Earlier this month, the Internal Revenue Service (“IRS”) published Notices 2008-51 and 2008-52.

Notice 2008-51 “provides guidance on a qualified Health Savings Account (“HSA”) funding distribution from an individual’s Individual Retirement Account (IRA) or Roth IRA to a Health Savings Account (HSA). The qualified HSA funding distribution is a one-time transfer from an individual’s IRA to his or her HSA and generally excluded from gross income and is not subject to the 10% additional tax under Internal Revenue Code (“IRC”) § 72(t).”

Notice 2008-52 provides guidance on contributions to HSAs under IRC amendments made by §§ 303 and 305 of the Health Opportunity Patient Empowerment Act of 2006 (the Act) included in the 2006 Tax Relief and Health Care Act , Pub. L. No. 109-432.

The House approved a Medicare fix bill today by a veto-proof margin. The National Journal reports that Senators Baucus and Grassley have reached a compromise that may lead to enactment of a law this month. According to the National Journal,

Baucus did not discuss details of the compromise he worked out with Senate Finance ranking member Charles Grassley, but industry sources say the compromise prevents a 10.6 percent Medicare physician pay cut for 18 months by giving physicians a 0.5 percent Medicare payment increase in 2008 and freezing payments in 2009. By contrast, the House-passed measure bumps up physicians’ pay 1.1 percent in 2009.

Previously CMS announced that any Medicare fix law enacted after June 16 must be applied retroactively.

Your FEHBlog learned from the Business Insurance reporter that the House and Senate negotiators adopted the effective date provision from the Senate bill (S 558) which reads as follows:

The provisions of this Act shall apply to group health plans (or health insurance coverage offered in connection with such plans) beginning in the first plan year that begins on or after January 1 of the first calendar year that begins more than 1 year after the date of the enactment of this Act.

Assuming enactment in 2008, the new mental health parity provisions would apply to FEHB plans for the 2010 contract year, which is a relief.