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Tuesday, July 14, 2009

AHA Special Bulletin: House Leaders Release Reform Bill

View the AHA Special Bulletin as a PDF.

House leaders today released the "America’s Affordable Health Choices Act of 2009." The "tri-committee" health care reform bill is the product of the leaders of three key House committees: Ways & Means, Energy & Commerce and Education & Labor. We’re still working through the 1,000-page plus bill, and will get you additional details as necessary. Meanwhile, here are some of the key provisions that affect hospitals. (Click here for the AHA Advisory on the previous draft version of the bill).

Payment rates: $119 billion in Market Basket reductions over 10 years. Includes a "productivity adjustment" for inpatient, outpatient, long-term acute care, rehabilitation and psychiatric hospitals. Also includes language stating that nothing can cause an update of les than zero for inpatient and outpatient hospitals.

Public option: Provides a public insurance option that pays hospitals at Medicare rates; allows Medicare providers, including hospitals, to opt out of participation in the public option.

Medicare DSH: $10 billion in cuts. If the uninsured rate is reduced between 2012 and 2014, Medicare DSH payments are reduced beginning in 2017, to the "empirically justified level," but with an upward adjustment for hospitals with high levels of uncompensated care costs.

Medicaid DSH: $10 billion in cuts. Beginning in 2017, federal spending is reduced $10 billion over three years ($1.5 billion in 2017, $2.5 billion in 2018, $6 billion in 2019). No later than 2016, the Secretary must report to Congress with recommendations on the appropriate targeting of DSH payments within states, and the appropriate distribution across states. The methodology for cuts would depend on state rates of uninsurance, and use of DSH money, which would be measured by uncompensated care and hospital Medicaid volume.

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Readmissions: $16 billion in cuts. Reduces payments in 2012 to hospitals, including critical access hospitals, based on the value of each hospital’s percentage of potentially preventable readmissions for three conditions. Beginning in 2013, expands the policy to an unlimited number of other conditions.

Bundling: Calls for the HHS Secretary to develop a plan to reform Medicare payment for post-acute care services. The legislation does not call for additional bundling demonstrations, but converts the current Acute Care Episode demonstration to a pilot program by January 1, 2011, and expands the pilot program to include post-acute care and other services. Participation in the pilot is voluntary.

Geographic adjustment: The Institute of Medicine will report on the validity and effects of the geographic adjusters used for physician and hospital payments, and make recommendations for improvements. In response, the Centers for Medicare & Medicaid Services (CMS) may spend up to $4 billion a year for two years.

Self-referral: Eliminates the exception for physician-owned hospitals under the whole hospital and rural provider exceptions under the Stark law, but grandfathers those with a Medicare provider agreement in place by January 1, 2009.

Rural providers: Extends Section 508 reclassifications, as well as the outpatient hold-harmless provision.

Healthcare-associated infections (HAI): Requires hospitals and ambulatory surgical centers to report on HAIs to the Centers for Disease Control and Prevention.

Healthcare-acquired conditions: State Medicaid programs are required to include policies that do not allow higher payments to a hospital if a patient gets a healthcare-acquired infection during the hospital stay, similar to the Medicare hospital-acquired conditions policy.

340B: Expands the 340B program to inpatient drugs for public and high-DSH non-profit hospitals. Also extends access to 340B inpatient and outpatient drugs for children’s, critical access hospitals, Medicare-dependent hospitals, sole community hospitals, and rural referral centers.

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