Morgan La Femina Good and Bad of HR 3962

Currently, Medicare provides health insurance for 47 million people, including 8 million people with permanent disabilities who are under the age of 65. The Patient Protection and Affordable Care Act, which was passed in March, most notably expands prescription drug benefits and offers incentives for providing efficient services. However, through various cuts it also reduces the growth in Medicare payments to healthcare providers and Medicare Advantage plans. Medicare comprises 1/4th of the US total national health expenditures in 2010. Specific cuts or adjustments to the Medicare payment schedule will first be outlined along with any tax increase, and then any benefit expansions will be outlined as well. Affordable Health Care for America Act (or HR 3962) key reductions in benefits are through freezes in payment schedules and increases in certain Medicare taxes. HR 3961 covers physician fee changes and will be discussed in another forthcoming outline. The new law passed through congressional reconciliation freezes part B payment thresholds at 2010 levels through 2019. There will also be a phased in change for Medicare Advantage plans to 100% of fee-for-service costs from 2011 to 2013 with a 1.5% to 3.0% bonus payment to high-quality qualifying plans, currently Medicare Advantage plans pay up to 113% of Medicare fee-for-service costs. HR 3962 eliminates the Medicare Advantage Regional Plan Stabilization fund with any remaining funds to be transferred into the Medicare Supplementary Medical Insurance Fund. The new law limits enrolment in chronic care special need plans to the annual coordinated open enrollment period. In 2013, the Medicare HI payroll tax will increase by .9% to 2.35% on earnings over 200,000 dollars for individuals and 250,000 dollars for couples. Likewise, in 2013, a 2.9% assessment will be levied on unearned income above 200,000 dollars for individuals and 250,000 dollars for couples. After January 1, 2011, healthcare plans are restricted from offering

coverage outside their service area. Medicare Advantage plans will be limited in cost sharing. HR. 3962 also eliminates part D cost sharing for non-institutionalized full-benefits dual eligible that would be institutionalized if not for community or home based care, which is provided under Medicare. The maximum amount of cost sharing for Medicare Advantage plans will be limited to what would apply under standard fee-for-service Medicare. The former provision will begin in 2011. HR 3962 requires plans with medical loss ratios below 85% to give rebates to plan members in order to reach a ratio of 85% or higher. The new laws require drug manufacture to provide Medicaid rebates for covered outpatient drugs to full-benefit dual Medicare/Medicaid patients, which reside in inpatient rehabilitation facility for the rest of 2010. According to the Henry J. Kaiser Family Foundation, HR 3962 adjusts the Medicare physician fee schedule as well as HR 3961. The new laws reduce Medicare payments to PPS and critical care hospitals for excessive hospital re-admissions. HR 3962 also directs the Secretary of HHS to develop outline strategies to bundle payments for a variety of services. The Secretary of HHS is also directed to establish pilot programs to test various types of payment incentive models, which would be designed to reduce the growth of Medicare. H.R 3962 includes adjustments to Medicare that expand service coverage in some areas of the program. Part B premium assistance will continue through December 2012 for those persons who earnings are within 120% to 135% of the poverty index. H.R 3962 provides full Medicaid benefits for those individuals that are under age 65 with incomes below 150% of the poverty index along with a corresponding 100% federal match until 2013, then in 2014 the federal match will be reduced to 91%. As of 2012, Medicare will cover immunosuppressive drugs indefinitely in contrast to the previous 36month limit for those who have had a kidney transplant. In 2011, Medicare coverage will be expanded to include post-mastectomy external breast prosthesis garments for those who have undergone a mastectomy. Effective January 1, 2010 the initial part D coverage limit will be increased by 500 dollars. Likewise, at that time, the part D out of pocket threshold will decrease. Over time, the coverage limit

will increase and the out of pocket coverage threshold will decrease, until the part D gap is eliminated. The part D coverage gap is expected to be eliminated by 2019. New provisions in H.R 3962 also extend a one-year moratorium on the phase out of hospice provider budget-neutrality adjustments. There will be a Medicare provider payment increase for diagnostic imaging services. Finally, it should be noted that in 2010 Medicare coverage was expanded to cover Amyotrophic Lateral Sclerosis or ALS.