WASHINGTON WIRE

In this issue, you'll find:

• Small Business Health Insurance Bill Remains Controversial
• CMS Releases Competitive Bidding Proposal
• Study Shows Seniors Unaware of Part D Deadline
• Transplant Groups Make Major Push to Increase Organ Donation
• Hearings and Events

Top Story

Small Business Health Insurance Bill Remains Controversial

As the Senate prepares for its legislative "Health Week" in early May, debate over a controversial small business health bill has heated up.

In March the Senate Health, Education, Labor, and Pensions (HELP) Committee passed the “Health Insurance Marketplace Modernization and Affordability Act of 2006,” (S. 1955). Hailed as a way to reduce costs for small businesses to provide employees health insurance, the legislation, sponsored by HELP Committee Chairman Senator Mike Enzi (R-WY), would allow small businesses to pool insurance risk to create Small Business Health Plans (SBHPs).

While many stakeholders are typically supportive of the establishment of "association health plans," it is this legislation's treatment of state mandates and consumer protections that have created growing opposition.

The bill would allow health insurance companies to bypass state mandates, that often require insurers to provide basic treatments and coverage, when designing benefits packages. Language in the bill specifically says that state laws cannot dictate what benefits insurers must offer, although the bill does require that insurers must offer a plan similar to a plan offered to state employees by one of the five most populated states. Insurers are also required to offer at least one low-cost option. However, cost sharing is at the discretion of the insurance companies. Many fear that those with high utilization rates, such a people with disabilities or chronic conditions, would loose access to comprehensive coverage.

In an attempt decrease opposition to the mandate exemptions, the legislation would require the federal government to establish a board to create new federal statutes that would “harmonize” with current state regulations. SBHPs would be held to the new “harmonized” standards rather than state statutes. These new standards would supersede any prior state regulations regardless of whether or not the state adopts the requirements of S. 1955. The legislation does not grant the federal government authority to enforce the new “harmonized” regulations but leaves it up to the states to adopt and enforce the regulations and to the federal courts to interpret them. If states try to enforce the new standards in a manner not suitable to the insurance companies, the insurance companies would be permitted to sue in federal court.

Thirty-nine state attorneys general, three governors and sixteen state insurance regulators oppose the legislation. The National Association of Insurance Commissioners has also expressed concern over the bill and written Senator Enzi. New Hampshire Governor John Lynch (D) stated that when his state enacted a similar law, insurance rates in the state went up at a very fast rate. AARP, the American Association of People with Disabilities, and close to 200 organizations across the country have also expressed opposition to the legislation.

However, the United States Chamber of Commerce, along with the National Federation of Independent Business, the National Association of Health Underwriters and the National Funeral Directors Association have publicly expressed support for this legislation, stating that it will give employees of small businesses a chance to purchase affordable health insurance. The groups also state that S. 1955 would increase competition and choice for providers and give small businesses more bargaining power.

Health Care News

CMS Releases Competitive Bidding Proposal

On Monday, April 24, 2006, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would establish a competitive bidding program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

This competitive bidding program is required by the Medicare Modernization Act of 2003 (MMA) and would reduce Medicare payments for these items by essentially replacing current DMEPOS fee schedules with competitively bid prices. The program would be segmented into metropolitan statistical areas (MSAs) and within each MSA, suppliers would submit bids for items. Medicare would establish payment based on the median of "winning" suppliers' bids. Those suppliers whose bids are lower than the payment amounts set could offer a rebate to beneficiaries.

Under the proposed rule, the three largest MSAs - New York City, Los Angeles, and Chicago - would be excluded initially and in the following ten largest MSAs, competitive bidding for DMEPOS would begin in 2007. The next 80 largest MSA would be phased in by 2009 and additional areas in the years following. CMS estimates that within five years of the implementation, Medicare will save over $1 billion annually.

The proposed rule would also establish a process for implementing new quality standards for entities that accredit DMEPOS suppliers. The agency will establish the standards through program instructions to be published on their website this spring.

The proposed rule can be found at http://www.cms.hhs.gov/CompetitiveAcqforDMEPOS/downloads/cms1270p_dme.pdf. Comments on the proposed rule are due to CMS by June 30, 2006.

Study Shows Seniors Unaware of Part D Deadline

On Tuesday, April 25, 2006, the Kaiser Family Foundation (“KFF”) released its most recent survey on the Medicare Part D prescription drug benefit. KFF has been surveying senior citizens in recent months on their overall satisfaction and use of the new drug benefit. Most of the respondents were satisfied with their prescription drug benefit. Eight in ten respondents stated that they experienced no trouble obtaining their medications.

However, the study also revealed that approximately 40 percent of those surveyed are not aware of the fast-approaching May 15 enrollment deadline. Almost 50 percent did not know the penalty for late enrollment, or that there even was a penalty. Seniors who enroll after May 15, 2006, will face a penalty of one percent of the average monthly premium for each month of delay. The next open enrollment is November 2006.

Various Medicare rights groups and Democratic members of Congress believe this data indicates a need to move the deadline back or eliminate a penalty for late enrollment. The Centers for Medicare and Medicaid Services (“CMS”) stated that the KFF survey conflicts with some of the information they have been receiving and that they have no intent of changing the May 15 enrollment deadline.

Transplant Groups Make Major Push to Increase Organ Donation

On Wednesday, April 26, 2006, a coalition of 13 major transplant organizations descended on Capitol Hill to push for increased federal funding for organ donation efforts. The Congressional “Fly-In” highlighted the nation’s serious shortage of organ donors and specific programs lawmakers could fund to increase the number of donated organs. Twenty-five transplant recipients, transplant surgeons, physicians, transplant nurses and organ procurement organization representatives came to Washington on behalf of the 13 organizations that comprise the “Transplant Roundtable,” a working coalition of major transplant organizations that represent virtually all transplant-related interests in Washington, D.C.

The “Fly-in” participants are attempting secure an initial $5 million in funding for a federal law passed in 2004 that authorized $25 million in new programs designed to increase the number of organ donors. The law, authored by Senate Majority Leader and transplant surgeon Bill Frist (R-TN), was enacted in 2004 but has not received funding since enactment.

Upcoming Events

Hearings and Events

Monday, May 1, 2006

Social Security and Medicare Trustees Report
U.S. Treasury
News Conference/Briefing
3 p.m., Main Treasury Building, Room 4121, 1500 Pennsylvania Ave., N.W.

Wednesday, May 3, 2006

Medicare Drug Plan
House Ways and Means - Subcommittee on Health
Subcommittee Oversight Hearing
10 a.m., 1100 Longworth Bldg.

Social Services for Older Americans
Senate Special Aging Committee
Full Committee Hearing
10 a.m., 106 Dirksen Bldg.

Thursday, May 4, 2006

State Mandates' Impact on Health Insurance
House Education and the Workforce - Subcommittee on Employer-Employee Relations
Subcommittee Hearing
10:30 a.m., 2175 Rayburn Bldg.

Role of Community Health Centers In Providing Access to Care
House Energy and Commerce - Subcommittee on Health
Subcommittee Hearing
1 p.m., 2123 Rayburn Bldg.

For More Information

For further information on any topics discussed or publications listed, or to get copies of anything mentioned in this alert, please call (202) 466-6550 and ask for the Legislative Practice Group.

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