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Significant Legislation Passed— The Medicare Improvements for Patients and Providers Act Includes Many Interesting Changes (and Non-Changes)


By Alex M. Hendler*

July 22, 2008

On July 9, 2008, the U.S. Senate voted 69-30 to close debate on the Medicare Improvements for Patients and Providers Act (MIPPA) and approved the measure by unanimous consent. The House of Representatives passed the measure by a 355-59 vote on June 24.

On July 15, 2008, the President vetoed MIPPA, but the House voted 383-41 to override the veto and the Senate voted 70-26 to override the veto, enacting MIPPA as Public Law 110-275. MIPPA makes the following changes, among others:

For physicians' and professional services:

  • Maintains the 0.5% conversion factor update for physician payments for the remainder of 2008 (retroactive to July 1, 2008) and guarantees a 1.1% conversion factor update for 2009;
  • Extends through 2010 incentive payments for professional services quality reporting and institutes incentive payments from 2009-2013 for practitioners who use electronic prescribing systems;
  • Extends until January 1, 2010, the geographic work index floor of 1.00; and
  • In addition to any applicable update, offers a 5% add-on payment for certain psychiatric services through December 31, 2009.

For Medicare Advantage:

  • Beginning in 2011, requires private fee-for-service plans to have explicit contracts or agreements with network providers and suppliers—plans will no longer be allowed to match Medicare fee schedule amounts in lieu of entering into explicit contracts or agreements with network providers and suppliers;
  • Reduces the funding available for the Medicare Advantage Stabilization Fund from $1.79 billion in 2013 to one dollar in 2014;
  • Beginning in 2010, phases out from capitation rates consideration of indirect medical education (IME) costs; and
  • Revises conditions under which special needs plans may operate.
    • The Congressional Budget Office has estimated that MIPPA's Medicare Advantage changes will reduce Medicare Advantage outlays by approximately $48.8 billion over the next 10 years.

For durable medical equipment (DMEPOS):

  • Invalidates supplier contracts awarded under Round 1 of the DMEPOS competitive bidding program and requires CMS to rebid those contracts;
  • Delays until 2011 the implementation of Round 2 of the program and authorizes the Secretary to subdivide large metropolitan statistical areas into multiple competitive bidding areas;
  • Excludes certain rural areas from the competitive bidding program prior to 2015; and
  • Repeals the transfer of ownership provisions for oxygen equipment furnished as capped rental equipment.

For Medicare beneficiaries:

  • Modifies enrollment and eligibility requirements for various low-income Medicare programs;
  • Increases Medicare coverage for certain preventive services;
  • Reduces Medicare beneficiary co-payments for outpatient psychiatric services;
  • Extends the therapy cap exception process through December 31, 2009; and
  • Adds coverage for cardiac and pulmonary rehabilitation programs for beneficiaries with chronic obstructive pulmonary disease.

For hospitals:

  • Modifies reimbursement for certain rural hospitals and facilities;
  • Authorizes the Secretary of Health and Human Services to recognize accreditation of hospitals by bodies other than The Joint Commission; and
  • Extends until January 1, 2010, the "charges adjusted to cost" reimbursement methodology for brachytherapy sources and therapeutic radiopharmaceuticals.

Additional changes:

  • Repeals the competitive acquisition program for clinical laboratory tests and reduces the annual clinical laboratory test fee schedule reimbursement adjustment from the full consumer price index (CPI) to the CPI minus 0.5 percentage points for 2009 through 2013; and
  • Institutes new restrictions on marketing Medicare Part C and Part D plans.

Please note that this is not a comprehensive summary of MIPPA as a whole or of the changes applying to each topic listed above; you may wish to review MIPPA to better understand the specific effects it may have.

Access the text of MIPPA and its procedural history.

Access the Congressional Budget Office cost estimates for MIPPA.

*We would like to thank Alex M. Hendler (Washington, DC) for providing this email alert.

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