President Obama’s looming deadline to hold congressional pre-conferences and
floor votes on comprehensive health care reform legislation before Congress’
August recess has prompted a flurry of legislative activity this week.
On Tuesday, July 14, 2009, the House released the Tri-Committee health care
reform bill, officially titled H.R. 3200, America’s Affordable Health Choices
Act of 2009 (Tri-Committee Bill), and with its party-line vote on Wednesday,
July 15, 2009, the Senate Health, Education, Labor, and Pensions (HELP)
Committee became the first congressional committee to approve a health care
reform bill. The Senate Finance Committee’s health reform bill may be released
as early as next week.
House Tri-Committee Bill Released
After delaying the originally planned release of the Tri-Committee Bill last
Friday, House leadership and leaders of the “Blue Dog Coalition” of fiscally
conservative Democrats were in talks last weekend to find a compromise on which
all parties could agree. Democrats still lack an official cost estimate for the
Tri-Committee Bill, which the Congressional Budget Office (CBO) has not yet
scored. A preliminary CBO estimate of the insurance expansion provisions of the
Tri-Committee Bill, however, put the total spending at just over $1 trillion
over 10 years, and said it would cover all but 17 million of the nation’s
estimated 46 million uninsured (half of the remaining uninsured would be illegal
The Tri-Committee Bill pays for health insurance coverage expansion for the
poorest 10 percent of Americans by proposing the implementation of an
incremental surcharge tax that would tax the 1 percent of Americans in the
highest income bracket. The surcharge would start at 1 percent and ramp up to
5.4 percent at the top of the income scale, and would apply only to individuals
making more than $280,000, or married couples making more than $350,000. The
Tri-Committee Bill also includes a tax on health benefits. Democrats said the
tax would affect 1.2 percent of households and up to 4.1 percent of small
Senate HELP Committee Completes Markup
The Senate HELP Committee’s approval of their bill ends a nearly month-long
markup that was conducted mostly along party lines. This partisan divide was
present in the hundreds of amendments considered by the committee, and in the
final vote -- a 13-10 party line split. The final legislation contained few
surprises. It would require individuals to obtain health insurance and require
employers to help cover the costs for their workers. It would create a new,
government-run insurance option to compete with private insurance plans. It also
would make major changes to how health care is delivered by focusing on the
provision of preventive care and wellness programs.
The HELP Committee Bill will next be combined with and reconciled against the
forthcoming Senate Finance Committee bill, which could be released and marked up
as early as next week. Sen. Christopher Dodd (D-CT), speaking July 15, 2009,
dismissed any possibility of bringing the HELP Committee Bill to the Senate
floor without the Senate Finance Committee’s product, saying “[w]e will bring
our two bills together.”
Impact for Post-Acute Care Providers and Physician-Owned Hospitals
1. Post-Acute Care Payment Bundling Study. Section 1152 of the
Tri-Committee Bill requires the Secretary of Health and Human Services to
“develop a detailed plan” to reform post-acute care payment services provided by
long-term care hospitals (LTACHs), skilled nursing facilities, inpatient
rehabilitation facilities, hospital-based outpatient rehabilitation facilities
and home health agencies. The plan is required to include detailed
specifications for developing a post-acute care bundled payment model that takes
into consideration the following factors, among others:
- Type of post-acute care provider.
- Whether payments for physicians should be included in the bundle.
- Period covered by the bundle.
- Whether bundled payments should be paid to acute-care hospitals or
post-acute care providers.
- Extent to which payment rates could be established to achieve efficiency
offsets expected to be achieved through bundling.
- Nature of protections needed to ensure that individuals receive
appropriate, quality care.
- Application of gainsharing, anti-referral, anti-kickback and antitrust
- How bundling rules would impact various provider-based rules (i.e. the
LTACH 25 percent Rule).
It is interesting to note that the Tri-Committee Bill does not require the
Department of Health and Human Services (HHS) to implement a payment bundling
demonstration project, but instead only requires a detailed plan analyzing the
feasibility of post-acute payment bundling to be developed. As currently
drafted, post-acute bundled payments could still be a number of years away,
since the establishment of a demonstration project would likely be the next
step. It should be noted, however, that Congressmen Rangel and Waxman are
contemplating introducing amendments to the Tri-Committee Bill to hasten the
speed at which a bundled payment pilot program would be implemented.
2. Physician-Owned Hospitals. Section 1156 of the Tri-Committee Bill
contains a provision that would prevent construction of new physician-owned
hospitals and restrict the expansion of current physician-owned hospitals. The
provision is almost identical to one contained in the House’s version of the
State Children’s Health Insurance Program (SCHIP) bill introduced earlier this
year. The provision would significantly impact current physician ownership and
investment interests in physician-owned hospitals, including LTACHs, and would
altogether ban future physician investment and ownership. If passed in its
current form, the legislation would:
- Grandfather physician-owned hospitals with a Medicare provider agreement
that are in operation as of Jan. 1, 2009. Hospitals under development as of
Jan. 1, 2009, would not be grandfathered under the proposed House bill.
- Prohibit physicians from increasing their ownership or investment
interest in physician-owned hospitals above the percentage held by such
physicians on Jan. 1, 2009.
- Prohibit the addition of beds, operating rooms, and procedure rooms in
physician-owned hospital going forward from the date of enactment of the
- Require physician-owned hospitals to submit an annual report identifying
each physician owner and investor, and the nature and extent of all
ownership and investment interests.
- Require physician-owned hospitals to have procedures in place to require
that any physician owner or investor disclose his or her ownership or
investment interest to a patient at the time the patient is referred to the
hospital in which he or she has an ownership or investment interest.
- Require physician-owned hospitals to disclose any physician ownership or
investment interest on the hospital’s website and in any public
- Ensure that ownership in hospitals by physician owners or investors is
bona fide and satisfies the Stark Act’s Whole Hospital Exception.
A similar ownership restriction and development prohibition is expected to be
included in the Senate Finance Committee’s bill, although experts believe that
the effective date of the physician ownership restriction contained in that bill
will likely be July 1, 2009.
3. Medicare Long-Term Care Hospital Improvement Act of 2009 Regulatory
Relief. Earlier this spring, legislation known as the Medicare Long-Term
Care Hospital Improvement Act of 2009 (LTCHIA) was introduced with strong
bipartisan support in both the House and Senate (H.R. 2124; S. 935). The Act was
introduced for the purpose of extending certain payment and regulatory relief
(i.e., a reprieve from the “25 percent Rule,” which generally reduces payment
for a certain percentage of patients transferred from short-term acute-care
hospitals to LTACHs) gained by LTACHs under the Medicare, Medicaid, and SCHIP
Extension Act of 2007. The provisions of LTCHIA were not included in the
Tri-Committee Bill, but industry insiders have expressed optimism that the
relief sought under LTCHIA will appear in the Senate Finance Committee Bill and
that the final conference reconciliation package will contain the LTCHIA
Congress is moving with unprecedented speed to formulate complex, sweeping
health care reform legislation that will impact all health care providers.
Please contact Mona G. Mohib, Jason S.
Greis, Scott P.
Downing or a member of McGuireWoods’
Health Care Department
or McGuireWoods Consulting
to learn more about the status of the various congressional health care bills.