Congress’ pre-election session drew to a
close on September 28, amid a flurry of legislative
activity on bills addressing border security, the
rights of military detainees, defense spending,
and homeland security spending. The House and Senate
concluded legislative business to return to their
home states and districts to campaign, and will
return for a “lame-duck” session after
the November elections. The following is a status
of developments that may be of interest to you
prior to the recess, and an outlook for lame duck
session.
Ways & Means, Senate
Finance committees Act on HSA legislation
On September 27, the House Ways and Means Committee
approved H.R. 6134, the Health Opportunity Patient
Empowerment Act of 2006, introduced by Reps. Eric
Cantor (R-Va.) and Paul Ryan (R-Wis.). As passed
by the committee, the bill includes several technical
corrections and enhancements to Health Savings
Accounts (HSAs). Among its provisions, the Cantor-Ryan
bill would:
- Authorize a one-time distribution from health
flexible spending arrangements (FSAs) and health
reimbursement arrangements (HRAs) to fund HSAs. As
passed, the bill also clarifies that individuals
who have FSAs would not be disqualified from
making tax deductible contributions to an HSA
if:
- The balance in the health
FSA at the end of the prior
plan year is zero;
- or the entire remaining balance in the
health FSA at the end of the prior plan year
is contributed to an HSA. Individuals
would be allowed to make a one-time distribution
from their individual retirement plans to
fund their HSAs.
- Modify the current law to limit the tax deductions
for HSA contributions. Current law limits the
deduction to the lesser of the annual deductible
or $2,700 for individuals and $5,450 for families. H.R.
6134 eliminates the “lesser of” provision.
- Requires the government to publish adjusted
COLA amounts no later than June first of the
preceding calendar year, beginning in any taxable
year starting after 2007.
- Permit individuals who establish an HSA after
the beginning of the year to make full-year contributions
to HSAs. (Current law prorates the contribution
limit.)
Additionally, the bill would enable employers
to make larger HSA contributions for non-highly
compensated employees than for highly compensated
employees.
The day before Ways & Means action, the Senate
Finance Subcommittee on Health Care held a hearing
to examine the early experience of HSAs as a new
option for health care consumers, although that
committee did not act specifically on any legislation.
When Congress returns for a lame duck session
in mid-November, House leadership could attach
these HSA provisions to any other legislative “vehicle” moving
through Congress.
2007 Medicare Choices Unveiled;
CMS Administrator Mark McClellan Steps Down
The Department of Health and Human Services (HHS)
announced information on stand-alone Medicare Part
D prescription drug plan (PDP) options for 2007. CIGNA
will offer CIGNATURE Rx, CIGNA Senior Care’s
Medicare Prescription Drug Plan, in all 50 states
and the District of Columbia. CIGNA HealthCare
for Seniors Medicare Advantage Prescription Drug
Plan also is available in selected counties of
Arizona.
Medicare beneficiaries will select
their pharmacy plans November 15, 2006 through
December 31, 2006 for coverage that will take effect
in January of 2007. Approximately four million
Medicare beneficiaries did not obtain prescription
drug coverage in 2006, and another two to three
million people are expected to "age-in" to
Medicare eligibility as they turn 65 in 2007. A
recent J.D. Power and Associates report indicates
approximately 19.5 percent of beneficiaries in
Part D plans will "definitely" or "probably" shop
for a new plan in 2007, representing 3.2 million
individuals.
CIGNATURE Rx will offer three plans
at varying costs. The Value Plan has the lowest
premiums and co-payments and features free generic
drugs and a deductible for brand drugs before coverage
begins. The Plus Plan is aimed at beneficiaries
who want immediate coverage at an affordable cost
and has low premiums and no deductibles. The Complete
Plan is for beneficiaries who want immediate and
continuous coverage for generic drugs without gaps
in the so-called "doughnut hole."
According to CMS, beneficiary premiums
will average $24 in 2007 if beneficiaries stay
in their current plan and the average number of
drugs included on a PDP formulary will increase
by approximately 13 percent next year.
Prior to the unveiling of the 2007
plans, CMS Administrator Mark McClellan, M.D.,
PhD. announced his resignation effective mid-October.
Leslie Norwalk, McClellan’s deputy administrator,
was named as Acting Administrator.
Health IT Conference Committee
continues to work for Compromise
Despite ongoing discussions by staff and lawmakers,
Congressional leaders were unable to reach an agreement
on health information technology legislation now
in conference committee. Each chamber previously
passed its own health information technology bills
(H.R. 4157/S. 1418) and efforts are ongoing to
resolve the differences between both bills to achieve
a compromise bill that could be brought for floor
votes in November. Some of the major points of
contention involve the timeframe for implementation
of ICD-10 standards, and whether to mandate interoperability
and quality requirements.
President Issues Executive
Order on Health Care Transparency
On August 22, President Bush signed an Executive
Order relative to health care transparency. Specifically,
the Executive Order signaled the federal government's
commitment to the development of:
- interoperable health information technology
standards;
- a standard definition/expectation of quality;
- a method to collect and disseminate information
on price, particularly the ability to aggregate
price data for episodes of care; and
- incentives for consumers to make value-based
purchasing decisions.
Secretary Leavitt indicated that the ability to
demonstrate leadership in these four areas will
be a condition of doing business with the federal
government. Leavitt also called on employer CEOs
to embrace this methodology in their own purchasing
decisions.
