D.C. Report: Medicare Restructuring Proposal, Budget Funding, Dr. Mostashari Named National Coordinator, Primer on ACO Rule

July 27, 2011

GOP Budget Chair Paul Ryan (R-WI) has proposed converting Medicare to a voucher program with heavy reliance on private insurance. “Premium Support” would give beneficiaries a fixed amount or voucher to purchase coverage. Those individuals now 55 and under would fall under Premium Support when they became eligible for Medicare. This proposal, along with converting Medicaid into a block grant program for states, is part of the House Republican FY 2012 Federal Budget proposal that would cut more than $5 trillion over the next decade, an amount greater than that proposed by the president’s debt commission.

Sharon Canner, Sr. Director of Advocacy

Medicare Restructuring Would Fundamentally Change Healthcare for Seniors and Disabled. GOP Budget Chair Paul Ryan (R-WI) has proposed converting Medicare to a voucher program with heavy reliance on private insurance. “Premium Support” would give beneficiaries a fixed amount or voucher to purchase coverage. Those individuals now 55 and under would fall under Premium Support when they became eligible for Medicare. This proposal, along with converting Medicaid into a block grant program for states, is part of the House Republican FY 2012 Federal Budget proposal that would cut more than $5 trillion over the next decade, an amount greater than that proposed by the president’s debt commission.

Supporters point out that this approach is similar to the Federal Employee Health Benefits Plan that serves federal workers, including Congress. But many see the voucher approach as reducing help for the most vulnerable patients as well as negatively impacting our healthcare system’s ability to effectively deliver care. Premium support is not a new idea. In the mid-90s, this concept was put forward by Senior Brookings Fellow Henry Aaron and in 1998 President Clinton’s National Bipartisan Commission on the Future of Medicare advanced the idea, which was followed by bi-partisan legislation. These efforts failed to gain traction as politically untenable. With the Democrats controlling the Senate and White House, premium support is not likely to gain much support this time around. However, the pressure created by enormous deficits and increased public attention to this matter is pointing to a serious look at entitlements. With large cuts already to discretionary spending for FY 2011, little else remains.

Meanwhile, the “Gang of Six” (bipartisan group of senators spanning the ideological spectrum) is fashioning their own budget package. In explaining their approach, the Gang of Six notes that the discretionary budget comprises only about 12 percent of the federal budget and to continually look for more cuts here makes no sense. Rather, everything should be on the table, including defense, tax incentives and entitlements. Group members are Senators Chambliss (R-GA), Coburn (R-OK), Conrad (D-ND), Crapo (R-ID), Durbin (D-IL) and Warner (D-VA).

Short-Term Funding Bill Still in Process. As of this writing, top Democrats and Republicans continued to negotiate a budget deal to avoid a government shutdown. Earlier in the week the U.S. House voted 247-181 to approve a continuing resolution (H.R. 1363) to fund most federal programs through April 15. However, the Senate declined to take up the measure and the White House indicated it would veto such a measure. Thus, 800,000 government workers could be furloughed and numerous government services halted should the shutdown occur. Stay tuned!

New National Coordinator Named. Deputy National Coordinator Dr. Farzad Mostashari has been selected by Health and Human Services Secretary Kathleen Sebelius to fill the top job at the Office of the National Coordinator, effective today. He follows Dr. David Blumenthal, who returns to Harvard this spring after a two-year stint in laying the groundwork for the electronic health record (EHR) Medicare and Medicaid Incentive Program. As Deputy National Coordinator, Dr. Mostashari has played a pivotal role in bringing together the various elements of the EHR Program while seeking the input and cooperation of the health IT community. He has worked closely with CHIME, particularly in recognizing the important role played by CIOs and CHIME StateNet in leveraging state-level coordination.

Primer on ACO Rule. On Thursday, the Center for Medicare and Medicaid Innovation (CMMI) held a conference call to answer questions from hospitals and other providers with regard to the newly released proposed rules for Accountable Care Organizations (ACOs). A range of topics were covered regarding the shared savings program, followed by a question and answer session. To listen to an encore presentation, please call (800) 642-1687 and ask for webinar number 56412910, which will be available through next Thursday. Also, CMS officials encouraged attendees to submit comments and suggestions to regulations.gov (searching for CMS1345P) through June 6, 2011. Further information will be available on CMMI’s website ( http://innovations.cms.gov) in the coming weeks.