H.R. 3962, the Affordable Health Care for America Act Strengthens and Improves Medicare

H.R. 3962, the Affordable Health Care for America Act , passed the House of Representatives by a vote of 220-215 on November 7, 2009. The goal of this major health care reform bill is to improve health care for Americans of all ages by reforming private health insurance, expanding coverage to the uninsured and underinsured, and eliminating wasteful spending.

America 's seniors have a major stake in the health care reform debate as the skyrocketing costs of health care are especially challenging for those on fixed incomes. The National Committee has worked hard to mobilize support for provisions included in H.R. 3962 that make important improvements to Medicare, manage costs, and attack waste.

Contrary to the rhetoric heard from opponents, H.R. 3962, the Affordable Health Care for America Act , does not cut Medicare benefits; rather it includes provisions to ensure that seniors receive high-quality care and the best value for our Medicare dollars. Importantly, the House also plans to vote on a closely-related piece of legislation, the Medicare Physician Payment Reform Act (H.R. 3961), as part of their health reform efforts. This bill will address impending physician Medicare payment cuts of 21 percent by changing the reimbursement system and investing $210 billion over ten years to help ensure that beneficiaries will be able to access medical providers. Together, the two bills will make important advances in improving Medicare.

The provisions of H.R. 3962 highlighted below will positively impact millions of Medicare beneficiaries and extend the solvency of the Medicare Trust Fund by five years. Additional provisions will benefit older Americans, particularly those ages 55-64.

Beneficiary Improvements

The bill closes the Part D doughnut hole coverage gap by $500 in 2010, and completely eliminates the gap in coverage by 2019, a ten-year phase out of the gap. Without this phase out, the doughnut hole would double by 2021 under current law. Elimination of the gap will be paid for with funds raised by requiring drug manufacturers to provide Medicaid rebates for drugs used by beneficiaries eligible for both Medicare and Medicaid.

 These provisions incorporate a voluntary agreement with PhRMA (The Pharmaceutical Research and Manufacturers Association) to provide discounts of 50 percent for brand-name drugs used by some Part D enrollees in the doughnut hole, beginning in 2010. This will provide many beneficiaries with relief as the doughnut hole is closed.

Under current law, the Department of Health and Human Services (HHS) is prohibited from negotiating drug prices for Medicare Part D plans. H. R. 3962 requires HHS to negotiate with drug manufacturers for lower Part D drug prices on behalf of Medicare beneficiaries. Price concessions achieved by HHS would supplement the price negotiations of the private Part D plans.

Under current law, Medicare provides coverage for the following preventive services: abdominal aortic aneurysm screening, bone mass measurement, cardiovascular screenings, colorectal cancer screenings, diabetes screenings, diabetes self-management, flu shots, glaucoma tests, hepatitis B shots, screening mammograms, medical nutrition therapy services, Pap tests and pelvic exams, one-time "Welcome to Medicare" physical exams, pneumococcal shots, prostate cancer screenings and smoking cessation counseling. However, beneficiary cost sharing for preventive services varies greatly. Some services are covered 100 percent; others are covered at 80 percent with the beneficiary paying 20 percent. In some cases, the annual Part B deductible must be met before Medicare pays its share; in other cases, Medicare pays even if the beneficiary has not met the Part B deductible.

H.R. 3962 includes a provision to improve the Medicare program by waiving deductible and coinsurance for all Medicare-covered preventive benefits. This means that these services would not require any out-of-pocket payments from beneficiaries. The legislation also provides Medicare coverage for all federally-recommended vaccines.

Currently, some Medicare Advantage beneficiaries may be receiving additional benefits for low-cost services such as vision and dental care or gym memberships. However, out-of-pocket costs for many high-cost services such as hospitalizations, home health care and chemotherapy are higher than they would be in traditional Medicare. Plans with higher cost-sharing for these services discriminate against sicker beneficiaries.

H.R. 3962 prohibits Medicare Advantage plans from charging beneficiaries more for any service covered by traditional Medicare.

 The bill improves assistance provided to low-income beneficiaries under the Medicare Savings Program (MSP) and the Part D low-income subsidy (LIS). The asset tests for assistance under MSP and LIS will be raised to $17,000 for individuals and $34,000 and for couples. (In 2009, the asset thresholds for LIS are $12,570 for individuals and $25,010 for couples for a full subsidy. In 2010, the MSP threshold will equal the thresholds for LIS.)

In addition, barriers to enrollment will be removed from these programs and people in home- and community-based services will be allowed the same level of LIS assistance that applies to people residing in institutions. The LIS program is further improved through the use of “intelligent assignment” if Medicare chooses a drug plan for a beneficiary. Under this approach, the individual will be matched with a plan based on an assessment of which drug plans would best cover her medications – an improvement over the current process which assigns beneficiaries randomly.

The bill will help preserve Medicare beneficiaries' access to primary care physicians by increasing payment rates for these practitioners by 5 percent. Practitioners that provide services in medically-underserved areas will receive an additional 5 percent. In addition, the bill provides for medical home and accountable care organization pilot programs, care models which improve the coordination of care and tie payment incentives to the attainment of quality goals.

H.R. 3962 also creates a Center for Medicare & Medicaid Payment Innovation within the Centers for Medicare and Medicaid Services (CMS) by 2011 to test and expand new provider payment models that encourage higher quality and lower cost.

Strengthening Medicare's Solvency

Under current law, private Medicare Advantage plans are paid on average 14 percent more per enrollee than it costs to provide comparable care in traditional Medicare. The Medicare Modernization Act of 2003 created these extra subsidies to entice more private insurers into the market because most private companies do not want to insure older people - a situation that generated the need for Medicare in the first place. These extra subsidies are paid for in part by taxpayers and in part by all beneficiaries, whether or not they are enrolled in a private plan, in the form of higher premiums. It is estimated that every couple receiving Medicare will pay about $90 in additional Part B premiums next year to subsidize those in the private plans.

H.R. 3962 reduces overpayments to Medicare Advantage plans over a three-year period beginning in 2011 so that they are equal to payments in traditional Medicare on a county-by-county basis. The legislation also provides targeted bonuses to high-quality plans in high-enrollment areas to reduce the impact of decreased payments. Medicare Advantage plans would still be required to cover all services that are included in Parts A and B of traditional Medicare.

 Medicare provides updates in its payments to providers, including hospitals, nursing homes, home health agencies, and others based on policies established by Congress. These payments are increasing rapidly each year due mostly to inflation in health care system-wide.

H.R. 3962 slightly slows the rate of increase in payments to providers - keeping in mind that they will continue to receive increases each year in ways that improve care and strengthen Medicare for the future. For example, one provision that will both save money and improve care is designed to reduce potentially preventable hospital readmissions by providing assistance for Medicare beneficiaries when they are transitioning from hospitals to their homes. 

Additional Medicare Program Improvements

Provisions in H.R. 3962 would provide nursing home regulators and families with more information about nursing home ownership and control as well as more information about staffing and the quality of care in particular nursing homes through Nursing Home Compare. In addition, this legislation establishes a national program for long-term care facilities and provides to conduct screening and criminal background checks on prospective employees who would have direct access to patients.

Currently, Medicare does not pay for translation and interpretation services to ensure that people with limited English proficiency are able to communicate with medical practitioners. The bill provides for a demonstration program to test ways of reimbursing for these services. The extent to which these services are currently provided by providers will also be studied.

The bill will also establish new offices of minority affairs at a number of agencies within HHS.

 Currently, doctors and other medical providers are not required to report the value of gifts they receive from pharmaceutical companies and medical device manufacturers. A number of recent reports have depicted the significant influence that these companies have over doctors' practice decisions through the sponsorship of educational programs research, and recreational activities. H.R. 3962 requires that gifts be reported and made transparent to help counter the conflicts of interest that currently exist.

Because of the wide variations in per capita spending on Medicare beneficiaries, experts believe that comparative effectiveness research, facilitated by improved health information technology, could provide a more efficient and high-quality system of care. The belief is that better information about treatment options - coupled with incentives for doctors and patients to use the information and change their behaviors - could reduce projected levels of health care spending over the long term without hurting, and likely improving, health outcomes.

H.R. 3962 includes provisions to ensure that subpopulations, such as older Americans and minorities, are appropriately represented in comparative effectiveness research and dissemination. The bill also contains protections to ensure that research findings are not used to determine payment for certain procedures or drugs or to interfere in the decisions made by health care providers and their patients.

Provisions Affecting Older Americans

It is often difficult for older Americans who are not yet eligible for Medicare, and whose previous employers may be dropping or reducing retiree health benefits, to find affordable private health insurance.

H.R. 3962, the Affordable Health Care for America Act includes provisions to assist this group including limiting the age rating ratio to 2:1, meaning insurers cannot charge an older person more than twice as much for insurance as a younger person; prohibiting employers from reducing retiree health benefits below what was offered to retirees at the time of their retirement unless reductions are also made to active workers' health benefits; and establishing a reinsurance program to help employers continue to provide health benefits to retirees age 55-64 and their families.

Currently, people in need of assistance to afford long-term services and supports - such as nursing home care or the personal care services needed to stay at home when one has a disabling condition - must spend down into poverty in order to become eligible for Medicaid. H.R. 3962 will establish a national voluntary insurance program for purchasing community living assistance. Premiums will be deducted from participants' paychecks, and a daily benefit of not less than $50 per day will be made available to help pay for services needed if participants experience disability. These payments will help people with disabilities avoid spending down to poverty. The CLASS program is designed to work with private insurance benefits or Medicaid to help cover needed services.

Government Relations and Policy, November 2009