House Republican aims to repeal Medicare doctor pay cuts

U.S. House Speaker John Boehner (R-OH) (R) listens to Rep. Eric Cantor (R-VA) (L) during a news conference at the U.S. Capitol in Washington, December 22, 2011.

Credit: Reuters/Jonathan Ernst

WASHINGTON | Wed Feb 13, 2013 2:59pm EST

WASHINGTON (Reuters) - Republicans in the House of Representatives will seek a permanent solution to scheduled steep cuts in physician payments from the federal Medicare health insurance plan for retirees and disabled people, a House committee chairman said on Wednesday.

Rep. Fred Upton, chairman of the House Energy and Commerce Committee, told doctors he hopes to send so-called "Doc Fix" legislation to the House floor this summer that would repeal payment reductions enacted in 1997 as part of a law to balance the federal budget.

The 16-year-old "sustainable growth rate" (SGR) provision calls for reductions in doctor pay as a way to control spending by Medicare. Congress has prevented the SGR from taking effect through temporary measures, but that has run up the fiscal and political costs of finding a permanent solution.

U.S. Doctors have voiced frustration about uncertainty caused by the persistent threat of steep reductions in Medicare reimbursement for their services. Some have even threatened to stop serving Medicare patients.

Upton said he believes the nonpartisan Congressional Budget Office has opened "a window of opportunity" for change. The budget office recently lowered its cost estimate for a long-term SGR fix to $138 billion, from $245 billion last August, due to lower Medicare spending on physician services.

"It's obviously a very large amount but a smaller mountain to climb," the Michigan Republican said in a speech to the American Medical Association (AMA).

"Our goal is to get it done this year, to actually have it on the House floor before the end of the summer -- July or the first week of August."

Upton said he would seek support from Democrats in the Republican-controlled House to achieve a bipartisan bill that could muster support in the Democratic-run Senate.

He offered no specifics on how his bill would pay for the cost of repealing the SGR.

In the latest episode of the cat-and-mouse game, physicians escaped a 27 percent reduction in Medicare payments scheduled for January 1, 2013, when Congress enacted a one-year $25 billion Doc Fix as part of its fiscal cliff legislation. The measure holds physician payments unchanged.

Upton and other leading Republicans on his panel have released a legislative blueprint that calls for freezing doctor payment rates for 10 years and basing future increases on their willingness to embrace methods to improve the quality and efficiency of care.

A bill introduced this month by House Democrat Allyson Schwartz and Republican Joe Heck would allow four years of payment increases while new payment and delivery models are vigorously tested.

An AMA proposal calls for a similar transition period, during which physicians would be rewarded for participating in new methods of care delivery.

(Reporting by David Morgan; Editing by David Gregorio)

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Obama Medicare rebate plan could hurt drug companies

By Bill Berkrot and David Morgan

Wed Feb 13, 2013 6:30pm EST

n">(Reuters) - President Barack Obama's decision to spotlight drug rebates as a way to save money on Medicare is likely to be opposed by the pharmaceutical industry, which could potentially lose billions of dollars in profits.

In his annual State of the Union speech on Tuesday, Obama said he would "reduce taxpayer subsidies to prescription drug companies" to rein in the rising cost of Medicare, the $600 billion healthcare program for the elderly and disabled.

Administration officials say the President was talking about requiring pharmaceutical manufacturers to offer rebates on drugs for 10 million people known as "dual eligibles" because they qualify for Medicare and Medicaid, and receive drug benefits through Medicare's Part D prescription drug program. Medicaid is the federal and state funded healthcare program for the poor.

The nonpartisan Congressional Budget Office estimates that requiring rebates for dual eligibles would save $137 billion in Medicare spending. Often the oldest and sickest beneficiaries, dual eligibles account for fewer than 20 percent of Medicare beneficiaries, but more than 30 percent of program spending.

Damien Conover, an analyst with the Morningstar investment research firm, said requiring Medicaid-level rebates for dual eligibles could trim 2 percent to 7 percent from the profits of drug manufacturers. The impact would vary depending on how much of a company's business is in the United States and how much is dependent on Medicare reimbursement, he said.

The U.S. pharmaceutical industry takes in about $300 billion a year in revenue.

"For most companies, it's probably a couple of percent hit to earnings, which is something clearly negative for the industry but manageable," said Barbara Ryan, a long-term pharmaceutical industry analyst, who now runs her own consulting firm. "Whether it could happen or not is another question, but it's unequivocally going to be the hot potato that's thrown around for the industry."

The rebate proposal, which has been circulating among policymakers and think tanks in Washington for years, had drawn industry ire before Obama's remarks on Tuesday.

Eli Lilly & Co Chief Executive John Lechleiter estimated it would cost the industry $112 billion over 10 years and reduce the number of new drugs developed.

"I think this would be disastrous for patients. It would be disastrous for pharmaceutical research. We think it's bad policy and we are going to fight it," he told a biotech conference in New York on Monday.

Other major drug companies contacted by Reuters, including Merck & Co and Pfizer Inc, declined to comment on the potential impact.

Pharmaceutical Research and Manufacturers of America, the industry's chief Washington trade group, warned that the proposal could "up-end" the successful Medicare Part D program that allows beneficiaries to purchase private drug coverage priced through competition.

It was unclear whether the proposal would ever succeed as legislation, given a bitterly divided Congress and predictions by some lobbyists that Medicare would see reforms only under a broad agreement that would require Republicans to accept higher tax revenues.

But analysts say the President, who this week backed away from a separate proposal to raise Medicare's eligibility age to 67 from 65, has few alternatives for wringing fiscal savings from the program. One option is raising costs for wealthier Americans eligible for Medicare benefits, which he also highlighted in his speech on Tuesday.

"Those two ideas are among the most palatable ideas for getting savings from the Medicare program," said Drew Altman, president and chief executive of the nonpartisan Kaiser Family Foundation, which tracks healthcare issues.

(Reporting by David Morgan in Washington and by Bill Berkrot in New York; Editing by Jilian Mincer and Leslie Gevirtz)

View the original article here

Obama Medicare rebate plan could hurt drug companies

By Bill Berkrot and David Morgan

Wed Feb 13, 2013 6:30pm EST

n">(Reuters) - President Barack Obama's decision to spotlight drug rebates as a way to save money on Medicare is likely to be opposed by the pharmaceutical industry, which could potentially lose billions of dollars in profits.

In his annual State of the Union speech on Tuesday, Obama said he would "reduce taxpayer subsidies to prescription drug companies" to rein in the rising cost of Medicare, the $600 billion healthcare program for the elderly and disabled.

Administration officials say the President was talking about requiring pharmaceutical manufacturers to offer rebates on drugs for 10 million people known as "dual eligibles" because they qualify for Medicare and Medicaid, and receive drug benefits through Medicare's Part D prescription drug program. Medicaid is the federal and state funded healthcare program for the poor.

The nonpartisan Congressional Budget Office estimates that requiring rebates for dual eligibles would save $137 billion in Medicare spending. Often the oldest and sickest beneficiaries, dual eligibles account for fewer than 20 percent of Medicare beneficiaries, but more than 30 percent of program spending.

Damien Conover, an analyst with the Morningstar investment research firm, said requiring Medicaid-level rebates for dual eligibles could trim 2 percent to 7 percent from the profits of drug manufacturers. The impact would vary depending on how much of a company's business is in the United States and how much is dependent on Medicare reimbursement, he said.

The U.S. pharmaceutical industry takes in about $300 billion a year in revenue.

"For most companies, it's probably a couple of percent hit to earnings, which is something clearly negative for the industry but manageable," said Barbara Ryan, a long-term pharmaceutical industry analyst, who now runs her own consulting firm. "Whether it could happen or not is another question, but it's unequivocally going to be the hot potato that's thrown around for the industry."

The rebate proposal, which has been circulating among policymakers and think tanks in Washington for years, had drawn industry ire before Obama's remarks on Tuesday.

Eli Lilly & Co Chief Executive John Lechleiter estimated it would cost the industry $112 billion over 10 years and reduce the number of new drugs developed.

"I think this would be disastrous for patients. It would be disastrous for pharmaceutical research. We think it's bad policy and we are going to fight it," he told a biotech conference in New York on Monday.

Other major drug companies contacted by Reuters, including Merck & Co and Pfizer Inc, declined to comment on the potential impact.

Pharmaceutical Research and Manufacturers of America, the industry's chief Washington trade group, warned that the proposal could "up-end" the successful Medicare Part D program that allows beneficiaries to purchase private drug coverage priced through competition.

It was unclear whether the proposal would ever succeed as legislation, given a bitterly divided Congress and predictions by some lobbyists that Medicare would see reforms only under a broad agreement that would require Republicans to accept higher tax revenues.

But analysts say the President, who this week backed away from a separate proposal to raise Medicare's eligibility age to 67 from 65, has few alternatives for wringing fiscal savings from the program. One option is raising costs for wealthier Americans eligible for Medicare benefits, which he also highlighted in his speech on Tuesday.

"Those two ideas are among the most palatable ideas for getting savings from the Medicare program," said Drew Altman, president and chief executive of the nonpartisan Kaiser Family Foundation, which tracks healthcare issues.

(Reporting by David Morgan in Washington and by Bill Berkrot in New York; Editing by Jilian Mincer and Leslie Gevirtz)

View the original article here

House Republican aims to repeal Medicare doctor pay cuts

U.S. House Speaker John Boehner (R-OH) (R) listens to Rep. Eric Cantor (R-VA) (L) during a news conference at the U.S. Capitol in Washington, December 22, 2011.

Credit: Reuters/Jonathan Ernst

WASHINGTON | Wed Feb 13, 2013 2:59pm EST

WASHINGTON (Reuters) - Republicans in the House of Representatives will seek a permanent solution to scheduled steep cuts in physician payments from the federal Medicare health insurance plan for retirees and disabled people, a House committee chairman said on Wednesday.

Rep. Fred Upton, chairman of the House Energy and Commerce Committee, told doctors he hopes to send so-called "Doc Fix" legislation to the House floor this summer that would repeal payment reductions enacted in 1997 as part of a law to balance the federal budget.

The 16-year-old "sustainable growth rate" (SGR) provision calls for reductions in doctor pay as a way to control spending by Medicare. Congress has prevented the SGR from taking effect through temporary measures, but that has run up the fiscal and political costs of finding a permanent solution.

U.S. Doctors have voiced frustration about uncertainty caused by the persistent threat of steep reductions in Medicare reimbursement for their services. Some have even threatened to stop serving Medicare patients.

Upton said he believes the nonpartisan Congressional Budget Office has opened "a window of opportunity" for change. The budget office recently lowered its cost estimate for a long-term SGR fix to $138 billion, from $245 billion last August, due to lower Medicare spending on physician services.

"It's obviously a very large amount but a smaller mountain to climb," the Michigan Republican said in a speech to the American Medical Association (AMA).

"Our goal is to get it done this year, to actually have it on the House floor before the end of the summer -- July or the first week of August."

Upton said he would seek support from Democrats in the Republican-controlled House to achieve a bipartisan bill that could muster support in the Democratic-run Senate.

He offered no specifics on how his bill would pay for the cost of repealing the SGR.

In the latest episode of the cat-and-mouse game, physicians escaped a 27 percent reduction in Medicare payments scheduled for January 1, 2013, when Congress enacted a one-year $25 billion Doc Fix as part of its fiscal cliff legislation. The measure holds physician payments unchanged.

Upton and other leading Republicans on his panel have released a legislative blueprint that calls for freezing doctor payment rates for 10 years and basing future increases on their willingness to embrace methods to improve the quality and efficiency of care.

A bill introduced this month by House Democrat Allyson Schwartz and Republican Joe Heck would allow four years of payment increases while new payment and delivery models are vigorously tested.

An AMA proposal calls for a similar transition period, during which physicians would be rewarded for participating in new methods of care delivery.

(Reporting by David Morgan; Editing by David Gregorio)

View the original article here