White House Releases Health Care Reform Proposal; Contact Your Legislator Today

 

Both the House and Senate bills raise $20 billion in revenue over the next 10 years.  The revenues are derived from fees to the medical device industry, including the vast majority of manufacturers from whom DME providers purchase.  The President’s Proposal replaces the medical device fee with an excise tax (yielding the same revenue) that starts in 2013 to facilitate administration by the IRS.  These fees affect an industry that has seen continuously shrinking margins, ensuring that manufacturers will undoubtedly be forced to pass added costs on to providers.
 

The House and Senate health reform bills contain an unprecedented array of aggressive new authorities to fight waste, fraud and abuse. The President’s Proposal builds on those provisions by incorporating a number of additional proposals that are either part of the Administration’s FY 2011 Budget Proposal or were included in Republican plans.
 

Comprehensive Sanctions Database. The President’s Proposal establishes a comprehensive Medicare and Medicaid sanctions database, overseen by the HHS Inspector General. This database will provide a central storage location, allowing for law enforcement access to information related to past sanctions on health care providers, suppliers and related entities. (Source: H.R. 3400, “Empowering Patients First Act” (Republican Study Committee bill))
 

Registration and Background Checks of Billing Agencies and Individuals. In an effort to decrease dishonest billing practices in the Medicare program, the President’s Proposal will assist in reducing the number of individuals and agencies with a history of fraudulent activities participating in Federal health care programs. It ensures that entities that bill for Medicare on behalf of providers are in good standing. It also strengthens the Secretary’s ability to exclude from Medicare individuals who knowingly submit false or fraudulent claims. (Source: H.R. 3970, “Medical Rights & Reform Act” ( Kirk bill))
 

Expanded Access to the Healthcare Integrity and Protection Data Bank. Increasing access to the health care integrity data bank will improve coordination and information sharing in anti-fraud efforts. The President’s Proposal broadens access to the data bank to quality control and peer review organizations and private plans that are involved in furnishing items or services reimbursed by Federal health care program. It includes criminal penalties for misuse. (Source: H.R. 3970, “Medical Rights & Reform Act” (Kirk bill))
 

Liability of Medicare Administrative Contractors for Claims Submitted by Excluded Providers. In attacking fraud, it is critical to ensure the contractors that are paying claims are doing their utmost to ensure excluded providers do not receive Medicare payments. Therefore, the President’s Proposal provision holds Medicare Administrative Contractors accountable for Federal payment for individuals or entities excluded from the Federal programs or items or services for which payment is denied. (Source: H.R. 3970, “Medical Rights & Reform Act” (Kirk bill))
 

Community Mental Health Centers. The President’s Proposal ensures that individuals have access to comprehensive mental health services in the community setting, but strengthens
 

Limiting Debt Discharge in Bankruptcies of Fraudulent Health Care Providers or Suppliers. The President’s Proposal will assist in recovering overpayments made to providers and suppliers and return such funds to the Medicare Trust Fund. It prevents fraudulent health care providers from discharging through bankruptcy amounts due to the Secretary from overpayments. (Source: H.R. 3970, “Medical Rights & Reform Act” (Kirk bill))
 

Use of Technology for Real-Time Data Review. The President’s Proposal speeds access to claims data to identify potentially fraudulent payments more quickly. It establishes a system for using technology to provide real-time data analysis of claim and payments under public programs to identify and stop waste, fraud and abuse. (Source: Roskam Amendment offered in House Ways & Means Committee markup)
 

Illegal Distribution of a Medicare or Medicaid Beneficiary Identification or Billing Privileges. Fraudulent billing to Medicare and Medicaid programs costs taxpayers millions of dollars each year. Individuals looking to gain access to a beneficiary’s personal information approach Medicare and Medicaid beneficiaries with false incentives. Many beneficiaries unwittingly give over this personal information without ever receiving promised services. The President’s Proposal adds strong sanctions, including jail time, for individuals who purchase, sell or distribute Medicare beneficiary identification numbers or billing privileges under Medicare or Medicaid – if done knowingly, intentionally, and with intent to defraud. (Source: H.R. 3970, “Medical Rights & Reform Act” (Kirk bill))
 

Study of Universal Product Numbers Claims Forms for Selected Items and Services under the Medicare Program. The President’s Proposal requires HHS to study and issue a report to Congress that examines the costs and benefits of assigning universal product numbers (UPNs) to selected items and services reimbursed under Medicare. The report must examine whether UPNs could help improve the efficient operation of Medicare and its ability to detect fraud and abuse. (Source: H.R. 3970, “Medical Rights & Reform Act” (Kirk bill), Roskam Amendment offered in House Ways & Means Committee markup)
 

Medicaid Prescription Drug Profiling. The President’s Proposal requires States to monitor and remediate high-risk billing activity, not limited to prescription drug classes involving a high volume of claims, to improve Medicaid integrity and beneficiary quality of care. States may choose one or more drug classes and must develop or review and update their care plan to reduce utilization and remediate any preventable episodes of care where possible. Requiring States to monitor high-risk billing activity to identify prescribing and utilization patterns that may indicate abuse or excessive prescription drug utilization will assist in improving Medicaid program integrity and save taxpayer dollars. (Source: President’s FY 2011 Budget)
 

Medicare Advantage Risk Adjustment Errors. The President’s Proposal requires in statute that the HHS Secretary extrapolate the error rate found in the risk adjustment data validation (RADV) audits to the entire Medicare Advantage contract payment for a given year when recouping overpayments. Extrapolating risk score errors in MA plans is consistent with the methodology used in the Medicare fee-for-service program and enables Medicare to recover risk adjustment overpayments. MA plans have an incentive to report more severe beneficiary diagnoses than are justified because they receive higher payments for higher risk scores. (Source: President’s FY 2011 Budget)
 

Modify Certain Medicare Medical Review Limitations. The Medicare Modernization Act of 2003 placed certain limitations on the type of review that could be conducted by Medicare Administrative Contractors prior to the payment of Medicare Part A and B claims. The President’s Proposal modifies these statutory provisions that currently limit random medical review and place statutory limitations on the application of Medicare prepayment review. Modifying certain medical review limitations will give Medicare contractors better and more efficient access to medical records and claims, which helps to reduce waste, fraud and abuse. (Source: President’s FY 2011 Budget)
 

Establish a CMS-IRS Data Match to Identify Fraudulent Providers. The President’s Proposal authorizes the Centers for Medicare & Medicaid Services (CMS) to work collaboratively with the Internal Revenue Service (IRS) to determine which providers have seriously delinquent tax debt to help identify potentially fraudulent providers sooner. The data match will primarily target certain high-risk provider types in high-vulnerability areas. This proposal also enables both IRS and Medicare to recoup any monies owed to the Federal government through this program. By requiring the Internal Revenue Service (IRS) to disclose to CMS those entities that have evaded filing taxes and matching the data against provider billing data, this proposal will enable CMS to better detect fraudulent providers billing the Medicare program. (Source: President’s FY 2011 Budget)
 

Businesses are strained by the current health insurance system. Health costs eat into their ability to hire workers, invest in and expand their businesses, and compete locally and globally. Like individuals, larger employers should share in the responsibility for finding the solution. Under the Senate bill, there is no mandate for employers to provide health insurance. But as a matter of fairness, the Senate bill requires large employers (i.e., those with more than 50 workers) to make payments only if taxpayers are supporting the health insurance for their workers. The assessment on the employer is $3,000 per full-time worker obtaining tax credits in the exchange if that employer’s coverage is unaffordable, or $750 per full-time worker if the employer has a worker obtaining tax credits in the exchange but doesn’t offer coverage in the first place. The House bill requires a payroll tax for insurers that do not offer health insurance that meets minimum standards. The tax is 8% generally and phases in for employers with annual payrolls from $500,000 to $750,000; according to the Congressional Budget Office (CBO), the assessment for a firm with average wages of $40,000 would be $3,200 per worker. Under the President’s Proposal, small businesses will receive $40 billion in tax credits to support coverage for their workers beginning this year. Consistent with the Senate bill, small businesses with fewer than 50 workers would be exempt from any employer responsibility policies.
 

The President’s Proposal is consistent with the Senate bill in that it does not impose a mandate on employers to offer or provide health insurance, but does require them to help defray the cost if taxpayers are footing the bill for their workers. The President’s Proposal improves the transition to the employer responsibility policy for employers with 50 or more workers by subtracting out the first 30 workers from the payment calculation (e.g., a firm with 51 workers that does not offer coverage will pay an amount equal to 51 minus 30, or 21 times the applicable per employee payment amount). It changes the applicable payment amount for firms with more than 50 employees that do not offer coverage to $2,000 – an amount that is one-third less than the average House assessment for a typical firm and less than half of the average employer contribution to health insurance in 2009. It applies the same firm-size threshold across the board to all industries. It fully eliminates the assessment for workers in a waiting period, while maintaining the 90-day limit on the length of any waiting period beginning in 2014.

 

 

We as an industry must ask that our legislators not support the proposed legislation.  We cannot support legislation that does not include provisions of H.R. 3790 (budget neutral and bi-partisan legislation to eliminate DMEPOS Competitive Bidding) and does include an excise tax on medical device manufacturers.

Call the U.S. Capitol switchboard at (202) 224-3121 to speak with your legislators. You will be asked for your ZIP code and then transferred to the office of your Representative (and repeat the process for Senators). Ask to speak with the Health Legislative Assistant.  Politely explain your position and request that your legislator not support health care legislation proposed by the White House.