House unveils final version of healthcare reform bill

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Democrats from the U.S. House of Representatives on Oct. 30 unveiled a revised healthcare reform proposal—H.R. 3692, the Affordable Health Care for America Act—which the Congressional Budget Office estimated carries an $894 billion price tag for the federal government.

In order to pay for the bill and not increase the federal deficit—as demanded by President Barack Obama—the bill, if passed, would levy a 5.4 percent tax on U.S. taxpayers earning more than $1 million, and a 1.5 percent tax on those who make more than $500,000, but less than $1 million.

The 1,990-page bill calls for the creation of a public insurance option to be offered through an insurance exchange to individuals and small businesses. Those companies and individuals, excepting small businesses, will be taxed if they do not provide or possess health insurance.

H.R. 3692 directs the Secretary of Health and Human Services to negotiate payment rates to providers (not tied to Medicare). The bill also allows states to create their own state-run public option.

Like the original presentation of H.R. 3200, the new version of the bill maintains changes to payments for imaging services. The bill could change Medicare payments for advanced diagnostic imaging procedures, such as MRI, CT, PET and nuclear medicine, particularly through an increase in the equipment utilization rate assumption from 50 percent to 75 percent. The equipment utilization assumption is a major factor in setting the technical component payments for these services.

The bill also speaks to increasing the payment reduction on contiguous body parts from its current 25 percent to 50 percent.  Both of these provisions would become effective Jan. 1, 2011. Under the bill, the HHS Secretary also is required to give preference to practices that are: located in "high-cost areas" of the United States; have experience in furnishing healthcare services to applicable beneficiaries in the home; and use EMRs, health IT and individualized plans of care.

H.R. 3692 also calls for a study by the Government Accountability Office to examine and evaluate the extent of physician self-referral arrangements and the effects such arrangements have on the cost of providing those services to Medicare beneficiaries. The study will focus on practice patterns in advanced diagnostic imaging and radiation oncology services. The legislation further mandates that the study should be submitted to Congress no later than July 1, 2011.

Additionally, if H.R. 3692 becomes law, the medical device industry would take a smaller hit than if the Senate Finance Committee bill becomes law. The House bill calls for a new tax equal to 2.5 percent of their products' prices--or $20 billion--for medical device makers on sales (and leases and uses treated as sales) after Dec. 31, 2012, as opposed to the Senate bill that demands $40 billion.

Finally, the House decided to introduce a separate bill on reforming the Medicare Physician Payment System, or sustainable growth rate (SGR) formula, and did not include a delay of the cuts to physician payments.

The separate House SGR reform bill, H.R. 3961, calls for a permanent reform and rebasing of the SGR identical to what was previously included in H.R. 3200. The House passed a budget resolution allowing for the $245 billion fix to the SGR to not be subject to statutory “pay-go” rules. Including the permanent fix in the overall bill would have significantly raised the cost of the legislation over the $900 billion target set by Obama.

The House Democratic leadership recently stated its intent to begin floor debate on the bill beginning on Nov. 5 and asked members of Congress to be prepared to vote over the weekend to complete the bill. As yet, it is unclear if Democratic leaders have secured the 218 votes needed to pass healthcare reform.