Medicare Regulatory and Contracting Reform Act of 2001

On November 1, the Centers for Medicare & Medicaid Services published in the Federal Register a final rule entitled, “Revisions to Payment Policies and Five-Year Review of and Adjustments to the Relative Value Units Under the Physician Fee Schedule for Calendar Year 2002.” This final rule made significant changes affecting Medicare Part B payment to reflect changes in medical practice and the relative value of services including interim RVUs for new and revised procedure codes for calendar year (CY) 2002, and a revised physician fee schedule update for CY 2002 and a revised conversion factor for CY 2002. The Medicare Physician Payment Fairness Act of 2001, S. 1707 and HR 3351, introduced by Senator James Jeffords and Rep. Michael Bilirakis to reduce an across the board cut of 5.4% in Medicare payments to physicians and set the conversion factor (update) for payments under the Medicare physician fee schedule for 2002 at 0.9 percent less than the conversion factor for 2001. The bills also direct the Medicare Payment Advisory Commission (MedPAC) to study and report to Congress on replacing the use of the sustainable growth rate as a factor in determining the update for such payments with a factor that more fully accounts for changes in the unit costs of providing physicians' services. Modification of Medicare physician fee schedule geographic work adjustor. HR 3569, the Rural Equity Payment Index Reform Act (REPAIR) introduced by Rep. Doug Bereuter, would lessen the disparity in Medicare physician payment that currently exists between urban and rural areas. S. 1953 Feingold legislation to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the Medicare physician fee schedule. S. 2752 by Jeffords authorizing the Centers for Medicare and Medicaid Services to conduct research demonstrations to examine health delivery factors that encourage the delivery of improved quality in patient care. S. 2555, the “Revitalizing Underserved Rural Areas and Localities (RURAL) Act of 2002” introduced by Senator Baucus with provisions to increase the geographic adjustment of physician reimbursement in low payment areas. The Medicare Modernization and Prescription Drug Act (HR4954) introduced by Reps. Thomas, Tauzin, Johnson and Bilirakis, provisions establishing a 2% Medicare Part B conversion factor update in 2003, 2004 and 2005; provisions instructing GAO to examine the impact of the geographic adjustment factor on physician payments under the Medicare physician fee schedule; increasing Medicare+Choice payments; and delaying “Lock-in” requirements for one year; establishing competitive bidding for certain Part B services. The Medical Excellence Demonstration Program Act of 2001 (S. 1756 introduced by Senator Jeffords, and HR 3746 introduced by Rep. Houghton) to establish demonstration projects to examine health care delivery factors that encourage improved quality of care. The conference report on HR 3448 the Public Health Security and Bioterrorism Preparedness and Response Act changed the Medicare+Choice “lock-in” provisions governing marketing and enrollment in M+C plans. The new provisions would postpone for three years limits determining when Medicare beneficiaries can switch health plans. These provisions also set limits on the period when M+C enrollment could be marketed to beneficiaries. Full reimbursement of Medicare Allowed Costs under Medicare Part B. Acceleration of Risk Adjustment implementation under Medicare+Choice. Preservation of floor payments in rural areas under Medicare+Choice. Waiver and or delay of Medicare+Choice “lock-in” enrollment limitations for 2002-2005. Extension of the New Entry bonus under Medicare+Choice. Demonstration programs under Medicare to increase beneficiary and plan participation in the Medicare +Choice Program. “Medicare Equity” concepts developed by Senate Finance Committee taking incremental steps towards Medicare reform, including restructuring CMS, improving Medicare+Choice, increasing the number of plans in rural areas, and easing payment inequities between urban and rural providers. HHS Initiative on Rural Communities, DHHS Secretary Thompson's call for a department-wide examination of federal health programs and how the federal programs respond to the needs of rural areas. Regulatory reform of CMS, through select provisions of the Medicare Education and Regulatory Fairness Act (S. 452, H.R. 858), H.R. 3046, the Medicare Regulatory, Appeals, Contracting, and Education Reform Act (The Medicare RACER Act) and the H.R. 2768, the “Medicare Regulatory And Contract Reform Act of 2001,” and H.R. 3391, The Medicare Regulatory and Contracting Reform Act” HR 3584, “The Medicare+Choice Improvement and Stabilization Act of 2001” legislation that would revise the payment structure of the Medicare managed care program for the year 2003 and make other changes to the program basing M+C payment on 100 percent of fee-for-service costs for 2003 only. Plans would then be paid based on whichever option was greatest: 100 percent of fee-for-service; a modified blend that re-weights the national average using M+C enrollment; floor payments as enacted in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000; or a 2 percent minimum increase. The bill would also delay the onset of the “lock-in” period by one year and enable demonstration projects for preferred provider organizations and disease management programs. Provisions of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, HR 5661. Section 412. HHS will be required to conduct a Physician Group Practice Demonstration to test, and expand the use of incentives to health care groups participating under Medicare. Section 429. BIPA requires GAO to study and submit a report to Congress and the Secretary on the reimbursement for drugs and biologicals and related services under Medicare. Section 437. BIPA requires GAO to conduct a study on the post-payment audit process for physicians services. The Comptroller General would also be required to conduct a study of the aggregate effects of regulatory, audit, oversight and paperwork burdens on physicians and other health care providers participating in Medicare. Medicare reimbursement for recovery care center services. Medicare Evaluation and Management Documentation Coding. Clarification of Medicare Formatting of Advance Beneficiary Notices. Medicare coverage of injected drugs

Client expense: $119,489 · Firm income: Not reported

Government targets: Agency for Healthcare Research & Quality (AHRQ), Centers For Disease Control & Prevention (CDC), Centers For Medicare and Medicaid Services (CMS), Congressional Budget Office (CBO), Council of Economic Advisers (CEA), Executive Office of the President (EOP), Food & Drug Administration (FDA), Government Accountability Office (GAO), HOUSE OF REPRESENTATIVES, Health & Human Services, Dept of (HHS), Health Resources & Services Administration (HRSA), Natl Institutes of Health (NIH), President of the U.S., SENATE, White House Office

Fiscal Year 2002 Budget Resolution H.R.1556,S.839 American Hospital Preservation Act of 2001 H.R.1609,S.885 Area Wage and Base Payment Improvement Act H.R.1354,S.548 Assure Access to Mammography Act H.R.1436,S.706 Nurse Reinvestment Act H.R.1897 Nurse of Tomorrow Act S.705,H.R.3292 Health Information Technology & Quality Improvement Act H.R.1143,S.582 Immigrant Childrens' Health Improvement Act of 2001 H.R.287 Prompt Payment of Health Benefits Claims Act of 2001 H.R.975,S.326 Home Health Payment Fairness Act S.135 Direct Graduate Medical Education Improvement Act S.721 Nurse Employment and Education and Development Act H.R.519,H.R.823,S.169 Local Medical Emergency Reimbursement H.R.1331,S.683 Fair Care for the Uninsured Act H.R.584, S.572 Medicaid Safety Net Hospital Continued Preservation Act H.R.3360, S.1745 Delay in Medicaid Upper Payment Limit Reduction S.1715, H.R.3448 Bioterrorism Preparedness act of 2001 H.R.3414 State Budget Relief Act H.R.2768 Medicare Regulatory and Contracting Reform Act Nursing Immigration issues HCFA Prospective Payment System regulations for 2002 reimbursement for hospital inpatient, hospital outpatient, skilled nursing facilities, home health agencies, and inpatient rehabilitation facilities patient assessment HCFA Advanced Beneficiary Notice for Medicare Beneficiaries regulation OSHA Ergonomics regulation FDA policy on single-use medical devices Health Care Workforce issues Medicare regulatory reform and flexibility

Client expense: $320,000 · Firm income: Not reported

S. 1738 - "Medicare Appeals, Regulatory, and Contracting Improvement Act of 2001" Legislation to amend title XVIII of the Social Security Act to provide regulatory relief, appeals process reforms, contracting flexibility, and education improvements under the Medicare program, and for other purposes. S. 1545, H.R. 2768, H.R. 3391 - " Medicare Regulatory and Contracting Reform Act of 2001" Legislation to amend title XVIII of the Social Security Act to provide regulatory relief and contracting flexibility under the Medicare Program H.R. 2973 - "Medicare Innovation Responsiveness Act of 2001" Legislation to amend title XVIII of the Social Security Act to provide for the expeditious coverage of new medical technology under the Medicare Program and to establish an Office of Technology and Innovation within the Centers for Medicare & Medicaid Services. H.R. 3046 - "Medicare Regulatory and Contracting Reform Act of 2001” Legislation to amend title XVIII of the Social Security Act to provide regulatory relief, appeals process reforms, contracting flexibility, and education improvements under the Medicare Program, and for other purposes. HR 2709 - "Medicare Improvements for Special Needs Beneficiaries Act of 2001" Legislation to amend title XVIII of the Social Security Act to improve access to Medicare+Choice plans for special needs Medicare beneficiaries by allowing plans to target enrollment to special needs beneficiaries and by eliminating the beneficiary lock-in and other administrative barriers to serving this population. H.R. 2980 - "Medicare+Choice Stabilization and Improvement Act of 2001" Legislation to amend title XVIII of the Social Security Act to stabilize and improve the Medicare+Choice Program. S. 357 - "Medicare Preservation and Improvement Act of 2001" Legislation to amend the Social Security Act to preserve and improve the Medicare program. S. 358 - "Medicare Prescription Drug and Modernization Act of 2001" Legislation to amend the Social Security Act to establish a Medicare Prescription Drug and Supplemental Benefit Program and for other purposes. S. 1135 - "Medicare Reform Act of 2001" Legislation to amend title XVIII of the Social Security Act to provide comprehensive reform of the Medicare program, including the provision of coverage of outpatient prescription drugs under such program. U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) 42 CFR 405, 412, 413, etc. Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2002 Rates, Proposed Rule U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, 42 CRF Part 412 - Medicare Program; payments for new medical services and new technologies under the acute care Hospital Inpatient Prospective Payment System. U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Servies (CMS), 42 CFR Parts 413, 419, and 489 - Medicare Program; changes to the Hospital Outpatient Prospective Payment System for calendar year 2002. Centers for Medicare and Medicaid Services (CMS) Hospital outpatient prospective payment system for FY 2002. Regulations covering new ICD-9 codes for cardiac resynchronization therapy.

On November 1, the Centers for Medicare & Medicaid Services published in the Federal Register a final rule entitled, “Revisions to Payment Policies and Five-Year Review of and Adjustments to the Relative Value Units Under the Physician Fee Schedule for Calendar Year 2002.” This final rule made significant changes affecting Medicare Part B payment to reflect changes in medical practice and the relative value of services including interim RVUs for new and revised procedure codes for calendar year (CY) 2002, and a revised physician fee schedule update for CY 2002 and a revised conversion factor for CY 2002. The Medicare Physician Payment Fairness Act of 2001, S. 1707 and HR 3351, introduced by Senator James Jeffords and Rep. Michael Bilirakis to reduce an across the board cut of 5.4% in Medicare payments to physicians and set the conversion factor (update) for payments under the Medicare physician fee schedule for 2002 at 0.9 percent less than the conversion factor for 2001. The bills also direct the Medicare Payment Advisory Commission (MedPAC) to study and report to Congress on replacing the use of the sustainable growth rate as a factor in determining the update for such payments with a factor that more fully accounts for changes in the unit costs of providing physicians' services. Modification of Medicare physician fee schedule geographic work adjustor. HR 3569, the Rural Equity Payment Index Reform Act (REPAIR) would lessen the disparity in Medicare physician payment that currently exists between urban and rural areas Full reimbursement of Medicare Allowed Costs under Medicare Part B. Acceleration of Risk Adjustment implementation under Medicare+Choice. Preservation of floor payments in rural areas under Medicare+Choice. Waiver of Medicare+Choice enrollment limitations for 2002 and 2003. Extension of the New Entry bonus under Medicare+Choice. Demonstration programs under Medicare to increase beneficiary and plan participation in the Medicare +Choice Program. “Medicare Equity” concepts developed by Senate Finance Committee taking incremental steps towards Medicare reform, including restructuring CMS, improving Medicare+Choice, increasing the number of plans in rural areas, and easing payment inequities between urban and rural providers. HHS Initiative on Rural Communities, DHHS Secretary Thompson's call for a department-wide examination of federal health programs and how the federal programs respond to the needs of rural areas. Regulatory reform of CMS, through select provisions of the Medicare Education and Regulatory Fairness Act (S. 452, H.R. 858), H.R. 3046, the Medicare Regulatory, Appeals, Contracting, and Education Reform Act (The Medicare RACER Act) and the H.R. 2768, the “Medicare Regulatory And Contract Reform Act of 2001,” and H.R. 3391, The Medicare Regulatory and Contracting Reform Act” HR 3584, “The Medicare+Choice Improvement and Stabilization Act of 2001” legislation that would revise the payment structure of the Medicare managed care program for the year 2003 and make other changes to the program basing M+C payment on 100 percent of fee-for-service costs for 2003 only. Plans would then be paid based on whichever option was greatest: 100 percent of fee-for-service; a modified blend that re-weights the national average using M+C enrollment; floor payments as enacted in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000; or a 2 percent minimum increase. The bill would also delay the onset of the “lock-in” period by one year and enable demonstration projects for preferred provider organizations and disease management programs. Provisions of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, HR 5661. Section 412. HHS will be required to conduct a Physician Group Practice Demonstration to test, and expand the use of incentives to health care groups participating under Medicare. Section 429. BIPA requires GAO to study and submit a report to Congress and the Secretary on the reimbursement for drugs and biologicals and related services under Medicare. Section 437. BIPA requires GAO to conduct a study on the post-payment audit process for physicians services. The Comptroller General would also be required to conduct a study of the aggregate effects of regulatory, audit, oversight and paperwork burdens on physicians and other health care providers participating in Medicare. TITLE VI. Sections 601-609. BIPA improves funding for beneficiaries in Medicare+Choice plans. Minimum payment rates for Medicare+Choice (M+C) Organizations have been increased to $475/month in rural areas. Minimum M+C updates have been increased to 3% in 2001. The phase in period for risk adjustment has been modified. The new entry bonus (5%) where no plans are available would be extended to 2001. Section 702. Protects Federally Qualified Health Centers from potential reductions in payments, by installing a cost-based system for calculating payment for FQHC's and rural health centers in 2001. The provision would create a new Medicaid prospective payment system for FQHCs and RHCs beginning in January of FY2001. S. 358. Medicare Prescription Drug and Modernization Act of 2001, Title III--Medicare+Choice Competition Program, SEC. 301. (a) Payments to Medicare+Choice Organizations based on risk-adjusted bids- Prescription drug benefits would be offered through existing Medicare+Choice plans and private insurers. Medicare reimbursement for recovery care center services. Medicare Evaluation and Management Documentation Coding. Clarification of Medicare Formatting of Advance Beneficiary Notices.