House Passes FY13 Budget With Major Health Care Reform Changes

Passed along party lines with only 10 Republicans voting against, this budget sets the GOP mark for discussions with the Senate. The Senate is unlikely to pass its own budget, which means there is likely to be a major spending fight later this year as Congress works to pass appropriations for 2013. There are major health care changes in the House bill. Here’s a summary:

Health Policy Changes

  • Repeals Affordable Care Act.
  • Over half of $5.3 trillion in total budget savings over next 10 years will be from health care programs.
  • Increases targeted funding for anti-fraud accounts in Medicare, Medicaid, Social Security and Disability Insurance programs.
  • Allows for an overhaul medical malpractice laws.
  • Allows the sale of insurance across state lines.
  • Expands the use of health savings accounts.
  • Converts the Supplemental Nutrition Assistance Program (SNAP) into a block grant program.
  • Committees of jurisdiction must identity approximately $238 billion through 2022 in savings over last December’s agreement on the Budget Control Act.


  • Adopts key elements of the Ryan – Wyden Medicare Plan. Estimated savings are $205 billion more than the Affordable Care Act over 10 years.
  • Current beneficiaries, age 55 and older, will see no changes in their Medicare plan.
  • The plan would impact new beneficiaries beginning in 2023.
  • Medicare will include the traditional fee-for-service option but also provides seniors the choice to elect premium subsidies for private plans.
  • Subsidies will be determined on a sliding scale dependent upon income, higher income seniors will pay higher premiums.
  • Private plans must be at or greater than the value of the fee-for-service option.
  • Private plans will be unable to deny coverage due to pre-existing conditions or community rating.
  • Private plans will compete with the traditional option in an open Medicare Exchange beginning in 2013.
  • Beginning in 2023 through 2034, the eligibility age for Medicare will gradually be increased from 65 to 67.

NOTE:  Under this proposal by 2030, CBO estimates spending on the average Medicare beneficiary will equal $7,400, 14 percent lower than what would be spent under current law.


  • Medicaid is converted into a block grant to states.
  • States will receive a lump sump each fiscal year and have more flexibility to tailor the program.
  • The budget cuts Medicaid by an estimated $770 billion over 10 years.

Senator’s Report Details Progress on ACOs, Bundling, Other Reforms

As members of Congress begin to peer beneath the rhetoric and into the real changes taking place in the health care delivery system, they will periodically produce a report that more accurately reflects those changes. Senator Sheldon Whitehouse released a report this week that does just that.  It’s a 52-page PDF. Click here.

NEJM Raises Questions About Pay for Performance Program

A new study in the New England Journal of Medicine challenged the pay for performance initiative undertaken a few years ago by Premier. The study’s conclusion: “We found no evidence that the largest hospital-based pay-for-performance program led to a decrease in 30-day mortality.” Click here.

Government’s Big Data Initiative Will Boost Health Care

The White House unveiled its Big Data Research and Development Initiative last week, an effort that aims to mine digital data for applications in biomedical research, scientific discovery and other areas. Six federal agencies and departments have pledged more than $200 million to the effort, which will promote the latest technologies available to gather, store and share Big Data; use it to facilitate advances in biomedicine and science, as well as other areas; and enlarge the workforce accordingly. Click here for the White House report.

Autism on the Rise: CDC

The CDC estimates that 1 in 88 children in the United States has been identified as having an autism spectrum disorder (ASD), according to a new study released last week that looked at data from 14 communities.  Autism spectrum disorders are almost five times more common among boys than girls – with 1 in 54 boys identified. The number of children identified with ASDs ranged from 1 in 210 children in Alabama to 1 in 47 children in Utah. The largest increases were among Hispanic and black children. Click here for more CDC information. HHS added 15 public members to its Autism coordinating committee. Click here to see a short bio on each.

Too Many Ambulances May Carry Staph Viruses:  Chicago Area Study

A study done of ambulance services across the Chicago metro area showed at least one Staphylococcus aureusisolate was found in approximately 69% of all ambulances in the study. Of all isolates detected, 77% showed resistance to at least one antibiotic, and 34% displayed resistance to 2 or more antibiotics. Click here for the report in the American Journal of Infection Control.

FDA Raises Questions, Seeks Input on Certain Hip Replacement Systems

The FDA last week announced it is seeking expert scientific and clinical advice on the risks and benefits of metal-on-metal (MoM) hip systems as well as potential patient and practitioner recommendations on the use of MoM hip systems and the management of patients implanted with such devices. FDA will discuss these issues at a two-day expert advisory panel meeting1 on June 27-28, 2012. The agency is currently considering whether to make MoM hip systems subject to more rigorous testing and premarket review requirements. A recent study noting an increased failure rate related to those systems that utilize large-diameter femoral heads has added to the agency’s existing concerns over the safety of MoM hip systems. Click here for details.

Medicaid Auditors Not Doing Their Job: HHS OIG

Audit Medicaid Integrity Contractors (Audit MICs) may not be doing their job, according to a report released last week by the HHS Inspector General. Out of $80 million identified by Review (MICs) as potential overpayments, just $6.9 million were confirmed as overpayments, according to the report that covers Jan. 1 through June 30, 2010. Of those that did not result in overpayments, 42 percent were completed with no overpayments or the reviews were discontinued by CMS and 39 percent were ongoing but unlikely to produce overpayments. Click here to see the OIG’s 29-page report.

Drug Stores File Anti-Trust Suit Against Express Scripps, Medco Merger

The National Association of Chain Drug Stores, the National Community Pharmacists Association, and nine pharmacy companies filed a lawsuit in the U.S. District Court for the Western District of Pennsylvania last week to block the merger. Click here to read the lawsuit.

No Individual Mandate Could Lead to Big Trouble in Individual Markets

The Supreme Court oral arguments for and against the Affordable Care Act were the biggest health care news in Washington last week. You likely got an overdose of news about it, so it won’t be repeated here. No telling what the justices will decide. Your guess is as good as mine. In a related development, a new report from the insurance industry says states that covered pre-existing conditions without an individual mandate saw serious troubles in their individual insurance markets. Some insurers pulled out of the markets, while others charged steep rate hikes to cover their costs, the report says. Click here for the study.  If you want to know more about the process the court will use to make its final decisions, click here for a good Washington Post story.

HHS Announces Three New CO-OPs

The government announced three new CO-OPs and more than $200 million for them to get started in Maine, Oregon and South Carolina. Click here for details.

MedPAC Meets This Week with Heavy Agenda Before June Report

MedPAC meets this week (April 5,6) with a packed agenda.  They will likely be voting on several issues to be included in their June report to Congress. On the agenda: CMS demos for dual eligible beneficiaries, reforming Medicare’s benefit design, variation in private sector payment rates, care coordination in fee for service. Click here for additional program details.