3962 contains numerous provisions affecting Medicare payments, payment rules, and covered benefits, and treats the Medicare program as both a funding source for health reform and a tool to shape future changes in the way that health services are delivered. Estimates from the Congressional Budget Office (CBO) on the bill indicate that, absent interaction effects, net reductions in Medicare direct spending may approach $128.1 billion from 2010 to 2014 and $460.8 billion from 2010 to 2019. 3962 . Such a demonstration would test the use of bundled payments for hospitals and post-acute care providers for improving the coordination, quality, and efficiency of post-acute care services and for reducing the need for readmission to hospitals from providers, among other outcomes. 3962 would also require the Secretary to develop a detailed plan for a Post-Acute Care Demonstration expansion, which would include HHAs. Starting in 2011, H.R. Starting in 2011, H.R. The bill would also establish a new prescription drug rebate program under which drug manufacturers would provide Medicare with rebates for the cost of drugs dispensed to certain low-income beneficiaries. Efforts to Reform Medicare's Fee-for-Service Payment Methods

As noted by MedPAC, the Medicare program must overcome limitations with its existing fee-for-service payment systems, by addressing its strong incentives to increase service volume and broadening the scope of Medicare's payment to encompass services provided by different entities during a patient's episode of care. Certain provisions included in H.R. Changes to Address Fraud, Waste, and Abuse

H.R. 3962

This appendix contains the majority of provisions in H.R. 3962 , as passed by the House on November 7, 2009, that affect the Medicare program. Payments for Efficient Areas. Payment for Imaging Services. Reducing Potentially Preventable Hospital Readmissions. Application to Critical Access Hospitals (CAHs) . Physicians . This provision would also require the Secretary, by no later than January 1, 2011 to convert the acute care episode demonstration into a pilot program and expand it to include post-acute services and such other services the Secretary determines to be appropriate. Elimination of Coverage Gap. Extension of Section 508 Hospital Reclassifications. Extension of Geographic Floor for Work. Extension of Ambulance Add-Ons. Improving Assets Tests for Medicare Savings Program and Low-income Subsidy Program . Enhanced Oversight Relating to Reimbursements for Retroactive Low Income Subsidy Enrollment . Payment Incentive for Selected Primary Care Services. The provision would extend the increase payments for psychotherapy services for an additional two years (ending December 31, 2011). In addition to providers and suppliers participating in Medicare, entities such as Medicaid managed care organizations, Medicare Advantage (MA) organizations, and Part D Prescription Drug Plans (PDPs) would be subject to this provision. The purpose of the CMI would be to test innovative payment and service delivery models to improve the coordination, quality, and efficiency of health care services provided to Medicare and Medicaid beneficiaries and to expand such models that are successful.
Containing scores of provisions affecting Medicare payments, payment rules, and covered benefits, H.R. 3962, as passed by the House on November 7, 2009, treats the Medicare program as both a funding source for health insurance reform and a tool to shape future changes in the way that health services are paid for and delivered. Estimates from CBO on the bill indicate that, absent interaction effects, net reductions in Medicare direct spending may approach $128.1 billion from 2010 to 2014 and $460.8 billion from 2010 to 2019. Major savings are expected from constraining Medicare's annual payment increases, linking payments for Medicare Advantage plans to fee-for-service payments, and requiring drug manufacturers to provide drug rebates for certain low-income Medicare beneficiaries. These savings would be offset by increases related to payment incentives for primary care services, expanded assistance for low-income beneficiaries enrolled in the Medicare prescription drug program, expanded coverage of preventive care services, and higher payments for various types of providers in rural areas.
With respect to reshaping health care delivery, H.R. 3962 would provide financial incentives to acute care and critical access hospitals to reduce potentially preventable readmissions and to improve care coordination starting in FY2012. These policies would be extended to post-acute care providers starting in FY2015. Another provision would require the Secretary to develop a detailed plan to bundle payments for post-acute care services within three years of enactment. Also, by January 1, 2011, the existing physician-hospital bundled payment demonstration would be converted to a pilot program and expanded to include post-acute services.
H.R. 3962 would also alter Medicare payments to a range of providers, physicians, practitioners, and suppliers. Certain provisions address more systemic issues, such as increasing physician payments for preventive services. Other provisions are time-limited extensions of existing payment policies, such as two-year extensions to Section 508 hospital reclassifications, the physician geographic floor, and rural ambulance add-ons. H.R. 3962 would also change the regulation of providers. For instance, Medicare providers would be subject to enhanced screening and oversight in areas designated as high risk for fraud and abuse. Additionally, the Stark whole hospital and rural exceptions for physician-owned hospitals would be eliminated, except for those existing physician-owned hospitals that qualify for an exception.
Finally, provisions in H.R. 3962 would improve Medicare benefits provided to individuals. For instance, the Medicare Part D coverage gap for prescription drugs (the "doughnut hole") would be eliminated, certain low-income subsidies would be amended by changing Medicare's asset test, and copayments would no longer be required for certain preventive care services.