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Reform Could Cut Provider Pay: Study

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WASHINGTON–Medicare Advantage payments to providers under the Senate health care reform bill would be based on enrollment-weighted competitive bidding instead of the current system, a law firm says.

But payment cuts to providers in the Senate bill would be far less than proposed under legislation passed by the House Nov. 7, according to the analysis by lawyers at McDermott Will & Emery.

The Senate bill is the Patient Protection and Affordable Care Act, and the House bill is H.R. 3962, the Affordable Health Care for America Act.

The Senate Saturday gave the go-ahead for floor debate on its bill by a vote of 60-39.

Under that bill, payments to providers would be reduced by $118 billion between 2010 and 2019, the traditional 10-year cost estimate period for federal budgets, according to the analysis by MWE.

By comparison, the Congressional Budget Office estimates that the House bill would reduce Medicare Advantage plan payments by $170 billion in the same period.

The Senate proposal on MA is “markedly” different than what is proposed under the House bill, the MWE analysis said.

The House bill would phase in benchmarks equal to the adjusted average per-capita cost estimate payable under traditional fee-for-service Medicare. The House bill would initiate the transition beginning with the 2011 benefit year, while the Senate proposal would initiate the transition with the 2012 benefit year, the analysis pointed out.

Currently, local benchmarks reflect an adjusted community rate for each county, which have been updated annually over the past several years, according to the Healthcare Law Reform Insights blog created by MWE.

To calculate plan payments, MA providers annually submit bids for their plan benefit packages that are compared to the benchmark for the counties in the plan’s service area.

Under the Senate bill, benchmarks by fiscal year 2015 would equal enrollment-weighted averages of local MA plan bids for each service area, the lawyers said. A ceiling would be established in each area so that local benchmarks could not exceed the levels that would have existed under current law.