UMN OSR

OSR Legislative Update: July 31, 2012

Topics this week:

1.         UK Health System Highlighted in Olympic Opening Ceremonies
2.         Budget sequestration in 2013 projected to reduce health related
funding
3.         Supreme Court Decision lowers cost estimates for Affordable Care Act
4.         3rd congressional hearing held to address Medicare Sustainable
Growth Rate
5.         Health Policy 101:  What is the MedicareSustainable Growth Rate
(SGR)?

1.         UK Health System Highlighted in Olympic Opening Ceremonies

Last Friday’s Opening Ceremonies to the 2012 Olympics in London featured a
segment celebrating their National Health Service.  The NHS was launched in
1948 during the post-WWII reconstruction effort with the ideal that “that
good healthcare should be available to all, regardless of wealth”.  Below is
a comparison of health care cost, quality, medical student debt and physician
compensation in the UK versus the US:

·      The NHS is atrue “socialized” health care system, funded by tax
revenue and completely government run.  This is distinctly different from the
US Affordable Care Act, which through a mandate requirescitizens to purchase
private insurance and receive healthcare through a largely privatized system.

·      UK citizens receive statistically comparable care to US citizens at
about 50% the cost.  According to the World Health Organization (WHO):

o   2008 life expectancy was 80 years in the UK versus 78 years in the US.
Infant mortality was 0.5% in the UK versus 0.7% in the US.

o   In 2007, theaverage person paid $3,867 for their healthcare in the UK
versus $7,285 in the US (in USD)

·      UK physicians receive free medical education.  US physicians graduate
with an average of $157K in student debt according to 2010 data from the AMA.

·      UK physicians make less money than US physicians.  According to a
Congressional Research Service Study in 2004 (CRS):

o   Annual compensation for UK general practitioners was $118K versus $161K for
US general practitioners (in USD)

o   Annual compensation for UK specialists was $150K versus $230K for US
specialists (in USD)

Sources:
http://www.nhs.uk/NHSEngland/thenhs/about/Pages/overview.aspx
http://www.who.int/whosis/whostat/2010/en/index.html
http://www.ama-assn.org/ama/pub/about-ama/our-people/member-groups-…
http://economix.blogs.nytimes.com/2009/07/15/how-much-do-doctors-in…

2.         Budget sequestration in 2013 projected to reduce health related
funding

In August 2011, the Budget Control Act was passed at the end of a long heated
debate over the “debt ceiling crisis”.   This act committed lawmakers to
budget spending cuts of $1.2 trillion in 2013.  The programs that would be cut
were to be determined either by the bi-partisan “super committee” or a
simple across-the-board cut known as the “sequester”.  With the
super-committee unable to come to agreement last year, lawmakers are now facing
the challenge of across the board, non-specific budget cuts schedule to hit
most government programs beginning in January 2013.  Below is a summary of how
health care may be affected:

·      A decrease of 7.8% is expected to hit 15 Health & Human Services
programs according to a study done by the Senate Labor-HHS-Education
Appropriations Subcommittee.  NIH sponsored medical research is included with
an expected 700 fewer grants, disproportionately affecting first-time
investigators

·      Benefits to Medicare beneficiaries are safe.  However reimbursements to
physicians could be cut by up to 2%.  This is independent of further cuts that
could come as a result of the sustainable growth rate (SGR).

·      Veterans Administration (VA) benefits and services are exempt from the
sequester.  However VA administrative costs could be decreased by up to 2%.

Sources:
https://www.aamc.org/advocacy/washhigh/highlights2012/299878/072712…
https://www.aamc.org/advocacy/washhigh/highlights2012/299872/072712…
http://www.ama-assn.org/amednews/2012/07/30/gvsa0730.htm

3.         Supreme Court Decision lowers cost estimates for Affordable Care Act

Although the Supreme Court recently upheld most aspects of the ACA, one
exception was the decision to make the expansion of Medicaid optional for
states.  As a number of states are now projected to decline the Medicaid
expansion, the CBO has nowrevised their estimates for the overall cost of the
ACA:

·      The CBO now projects that by 2022, 6 million fewer people will enroll
in Medicaid and 3 million more people will enroll in federally subsidized
health insurance exchanges – a net increase of 3 million uninsured people

·      As a result the CBO projects a net decrease of $84 billion over this
ten-year period

Also, the CBO has sent a letter to Speaker of the House John Boehner with
projection of the fiscal impacts of the recent bill passed by House Republicans
to repeal the ACA in its entirety (H.R. 6079).  It is estimated that a repeal
of the ACA will cause a net increase in federal budget deficits of $109 billion
over the 2013–2022 period.

Source:
https://www.aamc.org/advocacy/washhigh/highlights2012/299882/072712…

4.         3rd congressional hearing held to address Medicare Sustainable
Growth Rate

The Sustainable Growth Rate formula, were it to be implemented, would reduce
Medicare physician reimbursements by as much as 27%.  Congress has repeatedly
prevented the SGR from lowering pay dramatically and will likely do so again
this year (see HC 101 below for more on the SGR).

As an alternative to the SGR, the House Ways and Means committee held the third
of a series of hearings on July 24th to discuss potential reforms that
“explore new models for Medicare physician reimbursement that move away from
traditional fee-for-service.”  Highlights from the discussion include:

·      Any new payment model must “promote the physician-patient
relationship and reward physicians who provide high-quality and efficient
care”

·      Existing incentives such as e-prescribing, meaningful use for
electronic medical records and the value-based modifier were not designed with
sufficient input from practioners.  Future reforms must have a strong
collaboration between lawmakers and practioners.

·      Any “outcomes” based re-imbursement measures must be risk adjusted
for the patient population being served

·      Transition planning is critical to ensure consistent payments and
stability for physicians from the status quo to a future reformed model

Source:
https://www.aamc.org/advocacy/washhigh/highlights2012/299884/072712…

5.         Health Policy 101:  What is the MedicareSustainable Growth Rate
(SGR)?

The sustainable growth rate (SGR) is a formula that came out of the Balanced
Budget Act of 1997 as a mechanism to determine how much physicians should be
compensated for services to Medicare patients.  The formula is largely based on
GDP, which is a gross measure of the economy.  Initially the formula worked as
health care costs in the late 90’s increased commensurately with the economy.
However, as healthcare costs began to outpace inflation, the SGR began to fall
short of the actual cost of health care services.

Since 2003, both Republicans and Democrats in Congress have passed short term
“doc fixes” to prevent any actual decrease in physician reimbursement from
the SGR.  Over time this has accumulated to a deficit of over $300 billion.
The next “doc fix” is set to expire at the end of 2012, and if unaddressed
the 10 year deferred effect of the SGR would abruptly lower Medicare physician
compensation by as much as 27%.

It is likely that Congress will discuss another “doc fix”, however in light
of budget constraints already posed by the $1.2 trillion across-the-board cuts
from the sequester (Budget Control Act of 2011), lawmakers may find this
difficult.

The House Ways and Means committee has been exploring an alternative reform
that could replace the SGR (see above), however a solution has not yet been
reached.

Sources:
http://www.washingtonpost.com/blogs/ezra-klein/post/faq-the-doc-fix…
http://www.ama-assn.org/resources/doc/mss/cola_medicare_pres.pdf

Your loyal Legislative Affairs team,

Brad Hunter – Northeast Region
Robert Sanchez – Central Region
Sean Vanlandingham – Southern Region
Claire Sadler – Western Region
William Teeter – National Delegate

To access previous updates see our blog at:
https://www.aamc.org/members/osr/communications/legislative_affairs/

For more Health Care Policy news go to:
https://www.aamc.org/members/osr/communications/legislative_affairs…