October 19, 2009

On Sunday, October 11, the health insurers’ lobby turned on the Obama Administration by releasing a report showing that health care premiums for a typical family would grow by $1,000 to $4,000 per year under the Senate Finance Committee’s Healthcare Reform (HCR) package. On Tuesday, the Finance Committee passed its HCR bill, “America’s Healthy Future Act,” 14-9, with one Republican joining the majority. On Wednesday, Democratic leaders threatened to revoke the insurers’ antitrust exemption, a threat echoed by the Speaker of the House of Representatives on Thursday. Senate Democrats also met with representatives of organized medicine and introduced legislation that would repeal the Sustainable Growth Rate (SGR) formula and avert a projected 40 percent decrease in Medicare payments to physicians over the next five years.

Call your Senators today at (800) 833-6354 and ask them to support S. 1776, “The Medicare Physicians Fairness Act of 2009,” the bill that would repeal the SGR. If 60 Senators vote to invoke cloture as early this afternoon, S. 1776 will be fast-tracked and could reach the floor for full consideration next week. Specifically, ask your Senators to:

1. Vote "YES" on cloture.
2. Vote “YES” to waive the budget act.
3. Vote "YES" on final passage of S. 1776.

Nothing final happened last week, but control of HCR has shifted to the Democrats, and that might not change at least until the full Senate and the full House of Representatives vote on their respective final bills. The House has postponed any vote on HCR until November. Senate leaders have barely begun to meet with White House officials to work out a compromise package. Although we are a long way from knowing what reforms will be enacted, it suddenly seems more likely that Congress will pass, and the President will sign, transformative legislation. HCR is a hot topic at the annual meeting of the American Society of Anesthesiologists, which opened on Saturday, October 17 with the “Celebration of Advocacy” event that ABC had the honor of sponsoring. The recent Congressional activity does not decide matters, but a review should be of interest.

Medicare Payments, the Anticipated 21.5% Cut and the SGR

A separate bill that would repeal the SGR is a clever way to avoid adding $247 billion to the projected ten-year cost of the Senate Finance Committee bill. S. 1776 also eliminates the accumulated spending target debt and sets future physician payment updates at zero. Medicare would not implement the 21.5 percent SGR cut – not in 2010, and not in the future. One of anesthesiology’s and the whole House of Medicine’s major goals would thus be achieved. The American Medical Association announced on Thursday, October 15, that it would be launching a television advertising campaign appealing to seniors to lobby wavering Senators in twelve states.

Passing S. 1776 would set the stage for a new Medicare physician payment update system to be incorporated in the ultimate HCR legislation. The package adopted last July by the House of Representatives, H.R. 3200, contained two target pools with statutory increases that could be incorporated into the bill on which the Senate will vote.

S. 1776 faces a complicated procedural pathway. It also fails to offset the cost of repealing the SGR and thus would increase the budget deficit, unlike the Finance Committee’s “America’s Healthy Future Act.” It is far from sure that it will receive enough votes to pass.

Should S. 1776 or any other Congressional action to repeal the SGR fail, the Finance Committee bill would save the day temporarily by including a 0.5 percent physician payment update for 2010.

Private Health Plans in “America’s Healthy Future Act” and the Antitrust Exemption for Health Insurance Companies

Of major importance to anesthesiologists, who continue to be uniquely disadvantaged by Medicare payment rates, the Finance Committee bill provides for negotiated rates. In addition and significantly, the bill omits a public option and calls for Consumer Owned and Oriented Plans (CO-OPs), to compete with traditional insurance plans.

The Finance proposal contains an individual mandate instead of a requirement that employers offer health insurance. According to the Wall Street Journal, “Any final legislation is likely to include some type of annual penalty for those who forgo health insurance and are deemed able to afford it.”

Under the Finance bill, Individuals would be required to obtain a minimum level of health coverage unless the only available plan would cost more than 8 percent of an individual’s income. The penalty for failure to obtain coverage, when fully phased in by 2017, would be $750 per adult in the household. Persons who demonstrate “hardship,” Native Americans, and certain individuals whose religious beliefs would be compromised would be exempt from the mandate, as would those earning less than 133 percent of the poverty level (i.e., less than about $29,000 today). Current bare-bones policies would not meet new minimum standards for health insurance, and health plans would no longer be able to deny coverage based on pre-existing condition or to refuse to renew coverage for sick patients. There would be limits on the premiums that plans could charge older persons.

The individual mandate, even with tax credits to help families earning as much as $88,000 per year manage the premiums, would only cover about 94 percent of Americans, as estimated by the Congressional Budget Office. The insurance industry insists on universal coverage (100 percent). Last week, America’s Health Insurance Plans (AHIP) and Blue Cross Blue Shield each issued a report arguing that the Finance Committee proposal would cause premiums to increase dramatically and make coverage unaffordable for millions of people. Then AHIP announced that it would launch a television campaign warning that senior citizens enrolled in Medicare Advantage plans could lose benefits under the legislation.

Some HCR watchers believe that Karen Ignagni, AHIP’s president and a top healthcare lobbyist, miscalculated when she attacked the Senate Finance Committee package, ending a short-lived truce with the Democratic leadership and the White House. On Wednesday, the Senate Judiciary Committee held a hearing on “Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry.” Legislation introduced in the Senate (S. 1681, the Health Insurance Industry Antitrust Enforcement Act of 2009) and in the House (H.R. 3596) would repeal the insurance companies’ exemption from federal antitrust enforcement established by the McCarran-Ferguson Act in 1945.

McCarran-Ferguson is a familiar – and irritating – name to many anesthesiologists and other physicians. When anesthesiologists from different practices mention sharing anything that resembles fee information with each other, someone will caution them about price-fixing. The anesthesiologists will correctly point out that health plans can lawfully coordinate prices and policy issuance terms only to be told that the McCarran-Ferguson Act does discriminate in favor of the health plans by exempting “the business of insurance” from most federal legislation including the antitrust laws.

Health plans can steer their customers to particular hospitals and physicians, exchange information about potential customers’ medical risk before issuing coverage policies (“redlining,”) and, yes, collude on prices. Democrats are now questioning McCarran-Ferguson.

Senator Patrick Leahy (D-VT), chair of the Judiciary Committee, opened the hearing on Wednesday, October 14, with a statement that “the anti-competitive conduct of health insurers includes price-fixing, bid-rigging and market allocation.” Repealing their exemption would produce more competition and lead to lower premiums and greater consumer choice. The Justice Department testified in favor of repeal, as did Senate Majority Leader Harry Reid (D-NV). A day later, Representative Nancy Pelosi (D-CA), the House speaker, said, “There is tremendous interest in our caucus” in such a move.

On Friday the chairman of the House Judiciary Committee, John Conyers (D-MI), announced that he would hold a vote on the House counterpart to the Senate bill on October 21. In his weekly radio address, on Saturday, President Obama encouraged the Congressional review of McCarran-Ferguson without indicating whether he would sign repeal legislation.

There have been quite a few attempts to do away with the antitrust exemption over the years. Are we looking at another dust-up between the health plans and Congress; a mere “political ploy,” as AHIP said, or could McCarran-Ferguson be in real jeopardy now?

The antitrust exemption is not central to HCR and opening up another front in the battle over HCR would detract from the main issues of expanding access and paying for high-quality health care. The Senate and House bills that would repeal McCarran-Ferguson will probably not make it to the floor of either chamber for a vote. Releasing the report intended to scare patients and other about sharp premium increases may cost the health plans nonetheless. In an article titled “Will Insurers' Health-Care Attacks Backfire?” Time Magazine (www.time.com, October 16, 2009) noted, “Indeed, the insurers seem to have done nothing so much as galvanize the often fractious Democrats. Before this week, a proposed government-funded public plan to compete with private insurers to reduce costs seemed to be off the table. In the Senate it most likely still is; but in the House, Pelosi is using the industry's assault to coax recalcitrant moderates to sign on to a strong public option.”

Stay tuned.

ABC is very pleased to have made it possible for approximately 900 ASA members and supporters to have participated in the Celebration of Advocacy here in New Orleans. We hope that you find this update on HCR enlightening and that all anesthesiologists will join ASA’s grassroots network if you have not done so already.

With all good wishes to incoming ASA President Alexander A. Hannenberg, M.D., to outgoing president Roger A. Moore, M.D., and to our readers,

Sincerely,

Tony Mira
President and CEO