The bipartisan National Commission on Fiscal Responsibility and Reform is proposing that Congress pay for a Medicare physician payment fix in part by capping medical malpractice non-economic and punitive damages, which the panel suggests would save $64 billion over 10 years. The proposal comes as proponents of medical malpractice reform are gearing up to press the GOP-controlled House to make another pass at the issue.

Representatives from a prominent not-for-profit hospital alliance and the industry lobby for long-term care facilities tell Inside Health Policy that they will push for changes in provisions of the health reform law that cut their reimbursements through a "productivity adjustment."

CMS does not plan to redesign the competitive bidding program for durable medical equipment (DME) because 92 percent of suppliers offered contracts accepted them, CMS Deputy Administrator Jonathan Blum said Wednesday (Nov. 3). The DME industry responded that the agency is using faulty logic and pointed to a new laboratory experiment on the CMS auction that stakeholders suggest shows the situation will worsen the longer the program runs. The health reform law calls for an expansion of the bidding program.

A proposed rule that sets new quality bonus payments (QBP) for Medicare Advantage plans beginning in 2012 indicates that only three MA-PDP plans are eligible for the highest 5-star rating, and four prescription drug plans received the highest ranking.

The Obama administration is backing physicians' call for a 13-month legislative delay of Medicare physician payment cuts, while the new federal deficit commission has issued a draft recommendation stating that whatever Congress does to block the 23 percent cut scheduled for Dec. 1 it should be fully paid for. The American Medical Association last week urged lawmakers in the lame duck Congress to enact the 13-month pay fix after CMS issued a final rule incorporating the scheduled cut in part B reimbursements to doctors.

CMS' decision to have the United States Pharmacopeia update its Medicare Model Guidelines for prescription drugs every three years instead of annually has sparked concerns among some in industry, according to a Medicare expert and former HHS official. The expert raised the concerns in an interview with Inside Health Policy following USP's recent issuance of its latest draft of the guidelines, which the Medicare Modernization Act requires be done "from time to time" to reflect "changes in therapeutic uses of covered Part D drugs and additions of new covered Part D drugs."

HHS on Nov. 3 announced that states may receive 90 percent matching funds for the design and implementation of the new Medicaid eligibility verification systems that must be in place by 2014 under the health reform law, a major increase from current matching fund rates. Implementing the Medicaid expansion is one of the massive projects that states are responsible for, and paying for the new eligibility systems has been a major concerns, officials have said.

Among the targets of a Republican-led House will be a bevy of unpopular health reform law mandates that include the Independent Payment Advisory Board, Comparative Effectiveness Research, the CLASS Act and reductions in pay to Medicare Advantage plans, Washington Republican lobbyists and health care experts suggest.

The HHS Office of Inspector General has weighed in on a proposed rule CMS issued in September implementing provisions of the health reform law that allow the agency to suspend payments to providers when there are creditable allegations of fraud, or ban them from enrolling in the first place, and found that some of the fraud and abuse policies and procedures being used by Medicare officials now are out of date and sometimes contradictory. The OIG urges the agency to rectify the gaps when it issues a final version of the rule.

Home health companies are applauding CMS for significantly changing in-person encounter requirements in a final rule issued Tuesday, which otherwise includes modest changes to the earlier proposal. Other improvements cited by the National Association for Home Care (NAHC) include the final rule's payment rates; therapy coverage, assessment and documentation standards; and significant exceptions to the 36-month change in ownership rule.

With Republicans recapturing the majority in the House, health industry stakeholders are speculating about what's in store for Medicare Advantage plans, with some suggesting there are ways a GOP majority could soften tough policies enacted by Democrats, including scaling back an audit program that CMS is using to recoup overpayments from the plans.

CMS Administrator Don Berwick has set broad goals for the health reform law's new Center for Medicare and Medicaid Innovation and is working closely with the center's director, Richard Gilfillan, to design the center and build partnerships with a range of stakeholder groups. Berwick described the CMMI as the "jewel in the crown" of health reform, saying it has the potential to dramatically improve health care quality, but expected Republican gains in Congress could jeopardize the center's funding.

HHS plans to offer two additional coverage options for people receiving insurance through the federally run Pre-Existing Condition Plans, and is also asking states with their own high-risk pools to consider offering more plans to their constituents, HHS officials said. HHS is working with states, health care providers, insurers, advocates and other stakeholders to boost participation in the plans, which currently cover 8,011 people.

A GOP effort to repeal the health reform law's unpopular 1099 reporting provision may come up early in some form or fashion, but whether it will be broached as a stand-alone bill or as part of a larger measure is a "major decision point that has not yet been reached," according to a lobbyist memo circulating in Washington. The GOP's "Pledge to America" specifically mentions repealing the provision, and President Obama said last week he is open to changes. The provision, which requires businesses to report all transactions of $600 or more to the Internal Revenue Service, has been hotly contested.

The National Association of Chain Drug Stores (NACDS) is asking the IRS to further clarify its new policy affecting the purchase of over-the-counter medications on a tax-free basis and is saying a two-year delay in implementation may be necessary if the guidance is not changed. The IRS delayed the provision, slated to go into effect Jan. 1, 2011, for two weeks, but stakeholders say that is not nearly enough time to address concerns about the provision.

HHS plans to award grants to five states or coalitions of states to develop prototype information exchange systems for health insurance exchanges, responding to states' call for help in setting up the exchanges required by health reform in 2014, department officials said Friday. The department is leaving it up to those states seeking grants to determine how much money they need and has not set a figure for the grants, an HHS official said.

HHS has tasked the Institute of Medicine with examining how to define the "essential health benefits"requirement in the health reform law's so-called Patients Bill of Rights. The request comes weeks after beneficiary advocates criticized the department's interim final rule as being too vague on the term and deferring decisions to insurers.

With a Democrat holding a narrow lead in the not-yet-decided race for Minnesota's governorship, HHS is facing questions about how to address a possibility the state could begin applying for health reform grants that the outgoing Republican governor barred it from seeking. The deadline for applying for some of the grants has passed, but Democratic-Farmer-Labor candidate Mark Dayton's campaign says an HHS official signaled there "remains a possibility" the state could still ask for funding. An HHS official told Inside Health Reform a grant deadline could only be reopened for all states, not a single state.

NAIC health policy manager Brian Webb said the group is urging states to have their exchanges in place and actually selling products by at least Oct. 1, 2013 in order to be prepared for the health reform law's Jan. 1, 2014 effective date of the individual mandates.

The National Governor's Association announced that the recently formed National Association of Medicaid Directors (NAMD) will become an independent affiliate of the NGA. NAMD was established in August, after splintering off from the National Association of State Medicaid Directors (NASMD), which is affiliated with the American Public Human Services Association (APHSA)

A House Democratic staffer this week asked public hospitals to help explain the health reform law. Lauren Aronson, a staffer for the House Ways and Means committee but speaking on her own behalf at the National Association of Public Hospitals and Health Systems' fall conference in Washington, suggested that Democrats have not adequately informed the public about the health reform law and could use the hospitals' help in explaining the changes directly with patients.

Rep. John Shimkus (IL), ranking Republican on the House Energy and Commerce health subcommittee, has formally joined the race to chair the powerful committee and said repealing the health reform law would be his top priority. Shimkus will likely vie against Rep. Fred Upton of Michigan and Cliff Stearns of Florida, if current Energy and Commerce ranking member Joe Barton (R-TX) does not receive a waiver from party rules to run for the top seat.

The demonstration programs that CMS' Center for Medicare and Medicaid Innovation undertake are exempt from antitrust and anti-kickback laws, but the center is likely to tread carefully because if its demonstrations show promise and are expanded, those exemptions are dropped. That means the center will likely avoid designing programs that flagrantly violate antitrust and Stark laws, said Mandy Krauthamer Cohen, a CMS senior adviser.

House Speaker Nancy Pelosi's announcement that she plans to run for House Minority Leader surprised some Washington insiders. But one Democratic consultant noted that Tuesday's mid-term election left House Democrats with more liberal members, who are irked at conservative-leaning Democrats associated with Hoyer. The House Blue Dog caucus, which stood at around 54 or so members prior to Tuesday's election, was able to use it's strength to move several pieces of legislation -- including the health reform bill -- to the right.

Former HHS Secretary Michael Leavitt has predicted that there will be changes in the health reform law, but said the changes will be pursued through the budget process instead of in the context of health care. Leavitt, who served under President George W. Bush and now heads his own consulting firm, made the comments on CNBC's Squawk Box.

CMS Chief Medical Officer Barry Straube will step down at the end of January, CMS Administrator Donald Berwick said in an e-mail blast to agency officials last week. Straube has been instrumental over the years in forming and modifying CMS policy and perhaps is best known for changes in reimbursement that he spearheaded for anti-anemia drugs.

California Institute of Technology researchers told CMS officials in a private meeting Monday (Nov. 1) that their data show the pillars of the controversial durable medical equipment competitive bidding program are flawed and cannot be fixed with minor adjustments. CMS held the meeting with the academics on the design of the Medicare DME bidding program after canceling an earlier meeting after it was reported by Inside Health Policy, according to sources following the issue.

Both industry and health care beneficiary stakeholders quickly rejected a proposal from the co-chairs of the president's bipartisan fiscal commission that would reduce the federal deficit by cutting billions from the federal health care programs. Proposals broached by commission co-chairs Erskine Bowles, who was chief of staff for the Clinton White House, and former Wyoming Republican Sen. Alan Simpson include reducing payment to doctors and other providers, enacting medical practice reform, requiring Medicare drug rebates, increasing cost-sharing, expanding the authority of the unpopular Independent Payment Advisory Board and adding a robust public option to the health insurance exchanges.

CMS said Tuesday that it will move forward with proposals to require direct supervision for the start of certain therapy procedures as part of the final outpatient prospective payment system final rule for 2011. The rule, nearly 2,500 pages long, also indicates the agency will not change its rural adjustment policy or finalize a proposal to adjust payments to cancer hospitals.

Although health care reform hinges on expansion of state Medicaid programs, some say the unintended consequence could be that some states drop out of Medicaid and shift those beneficiaries into the insurance exchanges where the federal government will pay for all of the subsidies to those with incomes up to 400 percent of the poverty level. Dropping out of Medicaid likely would not save money in the next few years because the program is heavily subsidized by the federal government, but a Heritage Foundation researcher says such a move starts making fiscal sense in 2014 when the state-run, federally subsidized insurance exchanges are set up, and some states already are reviewing their options.