News in brief - Sept. 12, 2011

Lawmaker wants debt supercommittee to kill Medicare pay panel

The special committee tasked with cutting at least $1.2 trillion from future federal budgets should eliminate the Medicare Independent Payment Advisory Board as well, said Rep. Phil Roe, MD, (R, Tenn.).

Dr. Roe wrote Rep. Jeb Hensarling (R, Texas) and Sen. Patty Murray (D, Wash.), the co-chairs of the committee, to request that they repeal the 15-member IPAB, which was authorized by the health system reform law to make Medicare program cuts when projected spending exceeds growth targets.

Dr. Roe compared the IPAB's function to the Medicare sustainable growth rate formula, a budget mechanism that is scheduled to cut physician payments by nearly 30% in 2012. Congress has stopped SGR cuts from occurring in previous years, and stopping future payment reductions is expected to cost about $300 billion over the next decade.

"The IPAB also has tremendous fiscal implications," Dr. Roe said. "As with SGR, the IPAB is intended to restrain the skyrocketing cost of health care. Congress, however, has shown little appetite to enforce the cuts required by SGR."

Eliminating the IPAB, a move strongly supported by organized medicine, could increase deficits unless additional cuts are found elsewhere. A January analysis by the Congressional Budget Office concluded that repealing the IPAB would increase federal spending by $14 billion.

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GOP governors unveil Medicaid reform wish list

Congress should repeal the national health reform law's Medicaid expansion and allow state Medicaid programs to pay physicians and others based on "quality care and value-based criteria," bundle payments, and set program eligibility levels, according to Medicaid reform suggestions released Aug. 30 by the Republican Governors Assn.

The RGA issued the 31 recommendations in response to a May request for Medicaid reform ideas by House Energy and Commerce Committee Chair Fred Upton (R, Mich.) and Sen. Orrin Hatch (R, Utah), the highest-ranking GOP member on the Senate Finance Committee.

"Medicaid is in dire need of reform," said RGA Chair Bob McDonnell, Virginia's governor. "This report offers realistic ideas about how to fix Medicaid from the states' perspective."

Other suggestions include requiring Congress to pay for the health care costs of undocumented immigrants and allowing a state to contract with a single managed care organization in situations where patient volume is insufficient to justify the minimum requirement of two insurers.

Twenty-nine GOP governors provided input for the report, which is available online (www.energycommerce.house.gov/media/file/pdfs/083011rgppcmedicaidreport.pdf).

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Michigan adopts Medicaid claims tax to avoid cuts

The Michigan Legislature in late August repealed a 6% tax on certain Medicaid health plans and adopted a 1% tax on select Medicaid claims in an effort to preserve $1.2 billion in Medicaid funding.

The move was necessary because the state expected the Centers for Medicare & Medicaid Services to disallow the narrowly focused health plan tax, which applied to Medicaid contracted and specialty prepaid health plans. The new 1% tax will apply to most paid Medicaid claims, according to the nonpartisan Michigan House and Senate fiscal agencies.

"Millions of Michigan residents depend on Medicaid services, and thanks to the passage of these bills, they can continue to count on them," said Michigan Sen. Roger Kahn, MD, the legislation's sponsor. Michigan Gov. Rick Snyder had not signed the bills as of this article's deadline, but he indicated that he supported the legislation.

The Michigan State Medical Society supported the bills in part because the loss of revenue from ending the old tax without replacing it with the new tax would have forced the state to cut Medicaid physician payments in half, according to society spokeswoman Sheri Greenhoe.

The claims tax would take effect on Jan. 1, 2012, and would expire on Jan. 1, 2014. It does not apply to certain types of Medicaid claims, including those related to incentive compensation programs and those for out-of-state residents, and it would not apply to patient cost-sharing.

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