Healthcare Update: But How Will They Pay For It?

by King & Spalding

The end of 2013 proved a remarkable, albeit brief, period of bipartisanship as the Committees of jurisdiction worked together to adopt legislative solutions to several pressing national health care concerns. While the last few months of the year were peppered by continued hearings into the troubled kickoff of the federal Health Insurance Exchanges, and the even more troubled kickoff of their state counterparts, there were at least two major bipartisan healthcare achievements of note: passage of the Drug Quality and Safety Act (DQSA), and each Committee's adoption of a permanent solution to the "Sustainable Growth Rate" (or "SGR") Medicare physician payment issue. As we move into an election year, with its shortened legislative schedule, can it continue?

In November, Congress passed the DQSA, which for the first time in decades revised FDA's oversight of large scale drug "compounding," and created an extensive "track and trace" regime for drugs and their ingredients. Congress had agreed to many of the core provisions for months – particularly on the compounding provisions after last year's New England Compounding Center story when over a hundred were injured by contaminated compounds. Yet, it still took months for the Congress to reach agreement, and pass the legislation, which has already begun to take effect.

Similarly, each of the Committees of jurisdiction undertook adoption of a proposal to (finally) solve the SGR problem that has plagued Congress for a decade. Starting in September, the House Energy and Commerce Committee adopted its solution to eliminate a mandated 25% cut in Medicare physician payments, which has been escalating for years. In December, both the House Ways & Means Committee and the Senate Finance Committee marked up similar bills, adopting them with near unanimous bi-partisan support. While each permanently eliminated the SGR cuts, they each adopted slightly different proposals (varying in physician pay increase from zero to .5% or more, to adopting different quality measure payments, and other differences), requiring further negotiation among the committees to come to a uniform proposal. More important, however, than what was in the three bills was what was missing – the pay-fors.

Normally, none of the three Committees is even willing to entertain legislation unless it will not increase the deficit over the next ten years. Given the difficulty of finding over 100 billion in cuts, commenters at the time praised the committees for their political savvy in keeping the most controversial aspect of the legislation for the very end, so that it could avoid political attack. However, we now have three bills to be reconciled – it is likely that there are also three different ideas on the pay-fors. Can the bi-partisanship continue?

We will know by the end of March, when the current "SGR extension" postponing physician fee reductions expires. The House will be out of Washington from March 15-23, and the Senate will be out March 17-21, leaving only March 24-27 to get this done. The latest Congressional Budget Office estimate is that it will take $116 billion dollars over ten years to solve the gap. Whether the pay-for is proposed from reductions in drug payments, hospital reimbursement, a new tobacco tax, or even war wind-down savings, it promises to be highly controversial. It is worth staying tuned.

-David Farber

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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