Senate Democrats

S. 3101, the Medicare Improvements for Patients and Provider Act

Summary and Background

On Thursday, June 12, 2008, the Senate is expected to vote on a cloture motion on the motion to proceed to consideration of S.3101, the Medicare Improvements for Patients and Providers Act. This bill, which was sponsored by Senate Finance Committee Chairman Baucus, would improve the program for the 44.1 million seniors who are enrolled, provide additional help for low-income seniors, enhance rural and other hospital care, ensure proper pay for Medicare providers, improve outpatient services, reduce overpayment to some private Medicare plans, and improve the Medicare Drug Benefit program. The legislation would also provide for extensions related to the Medicaid program, Transitional Medical Assistance (TMA) program, Temporary Assistance for Needy Families (TANF) supplemental grant program, and Special Diabetes Grants program.

The Finance Committee has prepared a section-by-section summary of bill, which can be accessed on their website.

Major Provisions

Subtitle A: Beneficiary Improvements

Prevention, Mental Health, and Marketing. S.3101 would authorize coverage of new preventive services recommended by the U.S. Preventive Services Task Force and make improvements to seniors’ “Welcome to Medicare” physical, including a waiver of the deductible and an extension of coverage from six months to one year. The bill would also cut co-payments for mental health services to match other outpatient medical care. The measure would ban shady marketing practices by sellers of private Medicare plans and limit other sales and marketing tactics that may be deceptive or confusing to seniors. The bill legislation would also ban the sale of Medigap plans that are redundant as a result of the Medicare Part D drug benefit program and modernize Medigap benefits to better meet seniors’ needs.

Low-Income Programs. S.3101 would extend the Qualifying Individual (QI) program to pay outpatient coverage (Part B) premiums for seniors with incomes slightly above the poverty level. The bill would also raise the assets test for Medicare Savings Programs, increasing the amount of savings that low-income seniors can have and still qualify from $4,000 to $7,790 for individuals, and from $6,000 to $12,440 for couples.

The measure would further exempt the value of life insurance policies or assistance provided by churches and family members from the asset test for the low-income subsidy program in the Medicare drug benefit. Moreover, the legislation would eliminate penalties for late enrollment in the drug benefit by low-income seniors.

S.3101 would direct the Commissioner of Social Security to help low-income seniors apply for the Medicare Savings Program. Moreover, the bill would provide $25 million to State Health Insurance Assistance Programs (SHIPs) and Area Agencies on Aging to help enroll low-income seniors in the Medicare Savings Program and the low-income subsidy for the Medicare drug benefit, and to help all seniors better navigate Medicare.

The legislation would also end a requirement that states collect back subsidies for Medicare cost sharing from the estates of deceased Medicaid beneficiaries and would ensure beneficiaries’ rights to a federal court review if they are denied low-income subsidy.

Subtitle B: Provisions Relating to Part A

Rural and Other Hospital Care. S.3101 would extend the Medicare Rural Hospital Flexibility Program, which provides grants that rural health care providers can use to improve the quality of care facilities provide and to strengthen health care networks. The bill would provide new authority for states to improve access to mental health care services for veterans in crisis and other residents of rural areas. The legislation would also require the use of more recent data to better reimburse sole community hospitals – the only hospital within 35 miles.

S.3101 would establish a demonstration project to allow states to test new ways to better coordinate hospital, nursing home, home health, and other critical health care services in rural areas. The bill would also extend provisions providing certain hospitals additional payments to cover their labor costs under Medicare and revoke unique authority of the Joint Commission on the Accreditation of Healthcare Organizations to deem hospitals in compliance with Medicare Conditions of Participation.

Subtitle C: Provisions Relating to Part B

Physicians Services. S.3101 would block a cut in physician payments for Medicare services, and increase payments by 1.1 percent in 2009. The measure would also extend and increase the Physicians’ Quality Reporting Initiative (PQRI) bonus for providers who measure and report on quality of care. The bill would provide incentives to doctors who move to safer, more reliable electronic prescribing methods and would decrease payments to doctors who fail to do so by 2011. The legislation would also increase payment for primary care services in shortage areas, correct a reduction applied to physician work, and add new funding and authority for the Medical Home Demonstration Project. The bill would extend an increase in the geographic adjustment to payment for physician work in rural area and help physicians called to active military duty receive owed Medicare payments.

S.3101 would extend the rules allowing independent laboratories to bill Medicare directly. The measure would also implement an accreditation requirement for diagnostic imaging providers and tests the use of appropriateness criteria for such services. The bill would pay teaching anesthesiologists a full reimbursement for each patient under their care and comparable treatment of nurse anesthetists.

Other Payment and Coverage Improvements. S.3101 would allow exceptions when seniors need additional medical therapy beyond current caps. The bill would also extend current payment rules covering brachytherapy and radiopharmaceuticals. The legislation would allow speech pathologists to bill Medicare directly for services. The bill would improves payments and coverage for patients with chronic obstructive pulmonary disease (COPD) and other conditions, including reforms to oxygen payments. Further, the measure would revise payments for power wheelchairs to save Medicare dollars while making sure seniors get the equipment they need. The bill would repeal a competitive bidding demonstration for clinical laboratory tests and reduce scheduled increases in payments for these services.

S.3101 would improve access to ambulance services, particularly in rural areas and ensure that critical access hospitals – small hospitals serving large rural areas – are properly paid for clinical lab services provided to Medicare beneficiaries. The bill would expand the sites at which beneficiaries are eligible to receive telehealth services in rural areas. The legislation would also increase Medicare payments to community health centers.

S.3101 would require MedPAC to study and report on improving chronic care programs. The measure would also require the establishment of programs to fight chronic kidney disease, increase payments for renal dialysis services, and bundle payments for dialysis drugs, testing supplies, and other elements into a single, more cost-effective payment for the treatment of End-Stage Renal Disease (ESRD).

Subtitle D: Provisions Relating to Part C

Reforms for Private Medicare Plans. S.3101 would eliminate the “double payment” made to Medicare Advantage plans based on local costs for care at teaching hospitals – as teaching hospitals already receive extra payments directly for their sophisticated care. The bill would require private fee-for-service plans in Medicare Advantage to develop networks of providers to ensure care for beneficiaries, and to measure and report on quality of care. The measure would prohibit plans from “deeming” a hospital or provider as part of the plan’s “network” without negotiating an actual contract for payment and care. The legislation would also extend specialized Medicare Advantage plans’ authority to target enrollment of special needs individuals, and revises definitions, care management requirements, and quality reporting standards. The bill would limit co-payments for beneficiaries eligible for both Medicare and Medicaid when they are enrolled in specialized Medicare Advantage plans. The measure would eliminate some funds from the Medicare Advantage Stabilization Fund for regional

preferred provider organizations. The legislation would also extend authority to operate Section 1876 cost contracts. Moreover, the bill would direct MedPAC to study ways to collect quality information and other comparison data for Medicare Advantage plans, and to study alternative payment formulas for MA.

Subtitle E: Provisions Relating to Part D

Improving Pharmacy Access. S.3101 would require prompt payment to pharmacies by prescription drug plans for medicines dispensed through the drug benefit. The bill would also require regular updates on pricing standards for drugs and reasonable requirements for submission of claims by long-term care pharmacies.

The measure would include barbiturates and benzodiazepines under drug benefit coverage and would codify current rules related to coverage of “protected classes” of drugs. The legislation would also revise the definitions of “medically accepted indication” for coverage of drug benefit medicines.

Other Provisions

S.3101 would clarify the proper research uses of Medicare drug benefit data and address issues of quality reporting and health disparities. The bill would also contain a number of improvements and extensions related to the Medicaid program, most notably a delay in the implementation of changes to “Average Manufacturer Price” calculations that would slash payments to pharmacies for dispensing generic drugs.

The bill would also extend the Transitional Medical Assistance (TMA) and abstinence-only programs through 2009. Other extensions would include the Temporary Assistance for Needy Families supplemental grant program and Special Diabetes Grants.

Legislative History

On June 6, 2008, Senator Baucus introduced S.3101, theMedicare Improvements for Patients and Providers Act of 2008, which is co-sponsored by Senators Rockefeller, Bingaman, Snow, and Smith.  On June 9, 2008, S.3101 was placed on the Senate Legislative Calendar under General Orders (Calendar No. 772).  On June 10, 2008, Majority Leader Reid made a motion to proceed to the consideration of S.3101 and fileda cloture motion on the motion to proceed to the measure.

On Thursday, June 12, 2008, the Senate is expected to vote on a cloture motion on the motion to proceed to consideration of S.3101

Expected Amendments

Amendments are expected to S.3101. The first would be a substitute amendment, which includes provisions regarding competitive bidding.

CBO Estimate

On June 11, the Congressional Budget Office (CBO) provided a score for S.3101, including the proposed substitute amendment. CBO estimates that the bill, as amended, would “increase spending on physicians’ and other services by $19.8 billion over the 2008-2013 period and $62.8 billion over the 2008-2018 period[.] [The]se amounts would be offset[,] [however,] by reductions in payments to other providers (primarily Medicare Advantage plans). Taken together, the bill would reduce direct spending by $5 million over both the 2008-2013 and 2008-2018 periods.”

Administration Position

On June 12, 2008, the Administration released its Statement of Administration Position (SAP) in opposition to S. 3101. The SAP is available here.

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