MEDICAL LIABILITY REFORM WOULD PRODUCE SAVINGS:
As a bill to reform the nation’s medical liability system advances in the House, the Congressional Budget Office (CBO) has determined that enacting such legislation would reduce national healthcare spending by an estimated 0.4 percent. This equates to a reduction in the federal deficit of about $40 billion over the next 10 years.

The legislation – H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011 – would: establish, with some exceptions, a three-year statute of limitations from the date that an injury is discovered; restrict punitive damages; and cap noneconomic damages at $250,000. The HEALTH Act has been introduced repeatedly throughout the past several Congresses, and has consistently passed the House when the chamber is controlled by Republicans.

Most recently, H.R. 5 in the current 112th Congress has been approved by the House Judiciary Committee and is awaiting similar consideration before the House Committee on Energy and Commerce. While its passage in the House is all but inevitable, its prospects in the Senate are less clear.

IMPACT OF CUTS TO COMMUNITY HEALTH CENTERS:
Even though federal funding for community health centers received a boost in the Patient Protection and Affordable Care Act (PPACA), cuts to the program that were included in recent House-passed legislation – H.R. 1 – to fund the government for the remainder of Fiscal Year (FY) 2011 could put health centers at risk.

That message was conveyed to the House Appropriations Subcommittee on Labor, Health and Human Services (HHS), Education and Related Agencies during a March 11 hearing on the President’s FY 2012 budget. HHS Secretary Kathleen Sebelius stated that the $1 billion spending reduction for community health centers would cause many patients to lose access to care. Specifically, the National Association of Community Health Centers has stated that, if enacted, the cuts to health centers in H.R. 1 would cause an estimated 3.3 million patients to lose care within the next few months, with 11 million fewer patients being served over the course of the next year.

Labor-HHS Subcommittee Chairman Dennis Rehberg (R-MT) disagreed with the assertion, stating that while H.R. 1 would reduce funding by $1 billion, the mandatory funding that the PPACA provides for community health centers would cause the program to break even.

Either way, any final budget cuts for the remainder of FY 2011 will almost certainly be less than those included in H.R. 1, given the opposition that the bill faces in the Senate and at the White House.

HHS HOSPICE CAP RULED INVALID:
On March 11 and 15, the U.S. Court of Appeals for the Fifth Circuit and the U.S. Court of Appeals for the Ninth Circuit, respectively, issued near identical opinions that the HHS regulation that calculates Medicare’s hospice reimbursement “cap” on providers is invalid.

Under its current policy, Medicare reimburses providers a set amount for each day that a patient is in hospice, and after receipt of those payments, a fiscal intermediary determines the hospice cap for the relevant accounting year. Providers must then return any overpayments if it is determined that they exceeded their aggregate cap for that accounting year (though they may appeal the repayment demand).

In the cases before the Fifth Circuit, Ninth Circuit and several others, at issue is the regulation that HHS has set for calculating that aggregate amount. Statutory language requires that calculation to reflect the proportion of care that hospice patients received in previous or subsequent accounting years, but HHS put forth a regulation that counts patients only in the reporting year in which the bulk of hospice care would be expected to be provided.

In its ruling, the Ninth Circuit stated that HHS “decided to deviate from the statutory directive primarily as a matter of administrative convenience.” Additionally, the Fifth Circuit stated that “The text of the statute explicitly refers to ‘the proportion of hospice care that each such individual was provided,’ which cannot be accomplished through a single-year allocation that only seeks proportionality on the aggregate level across several years.”

NEXT STEPS:
We continue to follow news from Capitol Hill as these and other matters are considered by Congress. In addition, we continue to monitor HHS and other federal agencies as the implementation of healthcare reform progresses and related rulemakings are announced – such as the upcoming proposed rule on accountable care organizations (ACOs). We will bring you timely updates as these developments occur.