Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System

Jim Hahn
Analyst in Health Care Financing

Each year since 2002, the statutory method for determining the annual updates to the Medicare physician fee schedule, known as the sustainable growth rate (SGR) system, has resulted in a reduction in the reimbursement rates (or a "negative update"). With the exception of 2002, when a 4.8% decrease was applied, Congress has passed a series of bills to override the reductions. However, these actions have required almost yearly attention from the Congress. 

The SGR system was established because of the concern that the Medicare fee schedule itself would not adequately constrain overall increases in spending for physicians' services. While the fee schedule limits the amount that Medicare will pay for each service, there are no limits on the volume or mix of services. The SGR system was intended to serve as a restraint on aggregate spending. If expenditures over a period are less than the cumulative spending target for the period, the update is increased. However, if spending exceeds the cumulative spending target over a certain period, future updates are reduced to bring spending back in line with the target. 

In the first few years of the SGR system, the actual expenditures did not exceed the targets and the updates to the physician were close to the Medicare economic index (MEI, a price index of inputs required to produce physician services) in the first two years (2.3% in 1998 and 1999, compared with a MEI of 2.2% in 1998 and 2.3% in 1999). For the next two years, in 2000 and 2001, the actual physician fee schedule update was more than twice the MEI for those years (5.5% update vs. MEI of 2.4% in 2000, 5.0% update vs. MEI of 2.1% in 2001). However, beginning in 2002, the actual expenditure exceeded allowed targets and the discrepancy has grown with each year, resulting in a series of ever-larger cuts under the formula. 

Some criticisms of the SGR system point to purported flaws in the technical details behind the formula, while others have just expressed displeasure with the resultant outcome. Although modifications have been proposed to replace the SGR system, no proposal has garnered sufficient support and almost all proposals would be expensive to implement compared against the current baseline, which necessarily assumes that significant cuts to the fee schedule will occur. 

Legislative activity in the current session of Congress includes S. 1776, H.R. 3961, H.R. 3590, and H.R. 3326. S. 1776 would have (1) set the update to the conversion factor at 0% for 2010 and in subsequent years, and (2) sunset the SGR system immediately. On October 21, 2009, the cloture motion to proceed to the bill was not invoked by the Senate by a vote of 47-53. H.R. 3961 would create two categories of physician services (evaluation, management, and preventive services in one category with all other physician services in the other), each with its own separate target growth rate and conversion factor update. CBO has estimated that implementing the bill would increase direct spending by about $210 billion over the 2010-2019 period. On November 19, 2009, the House passed H.R. 3961 by a vote of 243-183, but the Senate has yet to take up the bill. The health care reform bill under consideration in the Senate, an amendment in the form of a substitute to H.R. 3590, no longer contains any provisions that address this issue after the manager's amendment repealed the original section. The FY2010 Defense Appropriations Act delays the implementation of the reductions for two months, until February 28, 2010. 


Date of Report: January 11, 2010
Number of Pages: 18
Order Number: R40907
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CRS Issue Statement on Health Care Reform

Chris L. Peterson, Coordinator
Specialist in Health Care Financing

Interests in health care reform are driven by growing concern about several widely discussed problems, most especially health insurance coverage, health care costs, and patients' access to quality care. Commonly cited figures indicate that more than 46 million people have no insurance, which can limit their access to care and their ability to pay for the care they receive. Costs are rising for nearly everyone, and the country now likely spends over $2.6 trillion, more than 16% of gross domestic product (GDP), on health care services and products, far more than other industrialized countries. For all this spending, the country scores but average or somewhat worse on many indicators of health care quality, and many may not get appropriate standards of care. 

These concerns raise significant challenges. Each of the concerns is more complex than might first appear, which increases the difficulty of finding solutions. For example, by one statistical measure, far more than 46 million people face the risk of being uninsured for short time periods, yet by another, substantially fewer have no insurance for long periods. Insurance coverage and access to health care are not the same, and it is possible to have one without the other. Having coverage does not ensure that one can pay for care, nor does it always shield one from significant financial loss in the case of serious illness. Similarly, high levels of spending may be partly attributable to the country's wealth, while rising costs, though difficult for many, may primarily mean that less money is available for other things.


Date of Report: January 14, 2010
Number of Pages: 4
Order Number: IS40678
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CRS Issue Statement on Medicaid and CHIP

Evelyne P. Baumrucker, Coordinator
Analyst in Health Care Financing

Medicaid plays a prominent and important role in the U.S. health care system. It is a means-tested entitlement program that finances the delivery of primary and acute care medical services, and long-term care for certain low-income populations. A federal-state matching program, Medicaid is the largest or second-largest item in most state budgets, and is second only to Medicare in terms of federal spending on health care. 

The recently reauthorized Children's Health Insurance Program (CHIP) allows states to cover targeted low-income children with no health insurance in families with income that is above Medicaid eligibility levels. Some adults (e.g., parents) may also be covered typically via special waivers. Current federal CHIP funding extends through FY2013. Unlike Medicaid, CHIP is not an entitlement program; instead federal matching funds are allotted to the states which in turn determine eligibility rules and covered benefits within broad federal guidelines.


Date of Report: January 14, 2010
Number of Pages: 5
Order Number: IS40379
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CRS Issue Statement on Public Health and Emergency Preparedness

Sarah A. Lister, Coordinator
Specialist in Public Health and Epidemiology

The H1N1 influenza pandemic provided policymakers with a mixed review of the nation's readiness to respond to health threats. In many respects the pandemic response was streamlined by prior planning efforts. Nonetheless, the incident has refocused congressional attention on a number of unresolved issues with respect to the federal role in preparing for and responding to public health emergencies. Among them, how should the Departments of Health and Human Services (HHS) and Homeland Security (DHS) operationalize their shared responsibility in preparing for and responding to public health emergencies? How can federal officials determine if a state is sufficiently prepared, and what activities should states be required to undertake using federal grant funds? How can the federal government assure the availability of drugs and vaccines for bioterrorism when there is no commercial market for these products? To what extent, if any, should the federal government be responsible for the costs of health care for disaster victims? The 111th Congress has been and will likely remain invested in these and many other issues through consideration of authorizing and appropriations legislation, and the conduct of oversight and investigations.


Date of Report: January 15, 2010
Number of Pages: 4
Order Number: IS40370
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CRS Issue Statement on Medicaid and CHIP

Evelyne P. Baumrucker, Coordinator
Analyst in Health Care Financing

Medicaid plays a prominent and important role in the U.S. health care system. It is a means-tested entitlement program that finances the delivery of primary and acute care medical services, and long-term care for certain low-income populations. A federal-state matching program, Medicaid is the largest or second-largest item in most state budgets, and is second only to Medicare in terms of federal spending on health care. 

The recently reauthorized Children's Health Insurance Program (CHIP) allows states to cover targeted low-income children with no health insurance in families with income that is above Medicaid eligibility levels. Some adults (e.g., parents) may also be covered typically via special waivers. Current federal CHIP funding extends through FY2013. Unlike Medicaid, CHIP is not an entitlement program; instead federal matching funds are allotted to the states which in turn determine eligibility rules and covered benefits within broad federal guidelines. 

Three distinct policy issues are at the heart of Congress's focus on Medicaid and CHIP. Should the federal government provide additional Medicaid funds to states during a recession, and for how long? What is the role of the federal government in funding and program design to ensure long-term sustainability of the program? And, what should be the role of Medicaid and CHIP in light of efforts to reform the nation's health care system?


Date of Report: January 14, 2010
Number of Pages: 4
Order Number: IS40379
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The Individuals with Disabilities Education Act (IDEA): Interactions with Selected Provisions of the No Child Left Behind Act(NCLB)

Ann Lordeman
Specialist in Social Policy

Nancy Lee Jones
Legislative Attorney

The Individuals with Disabilities Education Act (IDEA) and the No Child Left Behind Act (NCLB) are two of the most significant federal statutes relating to education. Although both have the goal of improving education—IDEA for children with disabilities and NCLB for all children—the two statutes take different approaches. IDEA focuses on the individual child, with an emphasis on developing an individualized education program (IEP) and specific services for children with disabilities, while NCLB takes a more global view, with an emphasis on closing gaps in achievement test scores and raising the aggregate scores of all demographic groups of pupils to specific levels. 

On December 4, 2004, President Bush signed P.L. 108-446, which reauthorized and amended IDEA. Among other things, P.L. 108-446 was aimed at better coordinating special education with the requirements of NCLB. Changes to IDEA have been in effect since the 2005-2006 school year. 

The relationship of IDEA and NCLB has become of increasing significance because of this relatively recent reauthorization of IDEA and guidance and regulations from the U.S. Department of Education (ED) on NCLB issues related to the education of children with disabilities. This report will provide a brief overview of IDEA and NCLB, a discussion of the intersection of selected provisions of IDEA and NCLB, and a discussion of ED regulations and guidance regarding IDEA and NCLB. The report concludes with a discussion of possible issues related to the interaction of IDEA and NCLB.


Date of Report: January 13, 2010
Number of Pages: 25
Order Number: RL33444
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The Individuals with Disabilities Education Act (IDEA): Interactions with Selected Provisions of the No Child Left Behind Act(NCLB)

Ann Lordeman
Specialist in Social Policy

Nancy Lee Jones
Legislative Attorney

The Individuals with Disabilities Education Act (IDEA) and the No Child Left Behind Act (NCLB) are two of the most significant federal statutes relating to education. Although both have the goal of improving education—IDEA for children with disabilities and NCLB for all children—the two statutes take different approaches. IDEA focuses on the individual child, with an emphasis on developing an individualized education program (IEP) and specific services for children with disabilities, while NCLB takes a more global view, with an emphasis on closing gaps in achievement test scores and raising the aggregate scores of all demographic groups of pupils to specific levels. 

On December 4, 2004, President Bush signed P.L. 108-446, which reauthorized and amended IDEA. Among other things, P.L. 108-446 was aimed at better coordinating special education with the requirements of NCLB. Changes to IDEA have been in effect since the 2005-2006 school year. 

The relationship of IDEA and NCLB has become of increasing significance because of this relatively recent reauthorization of IDEA and guidance and regulations from the U.S. Department of Education (ED) on NCLB issues related to the education of children with disabilities. This report will provide a brief overview of IDEA and NCLB, a discussion of the intersection of selected provisions of IDEA and NCLB, and a discussion of ED regulations and guidance regarding IDEA and NCLB. The report concludes with a discussion of possible issues related to the interaction of IDEA and NCLB. .


Date of Report: January 13, 2010
Number of Pages: 25
Order Number: RL32913
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Veterans Health Administration: Community-Based Outpatient Clinics

Sidath Viranga Panangala
Specialist in Veterans Policy

Bryce H.P. Mendez

In the early 1990s, the Veterans Health Administration (VHA)—one of the three administrations of the Department of Veterans Affairs (VA)—began developing a strategy to expand its capacity to provide outpatient primary care, especially for veterans who had to travel long distances to receive care at VA facilities. To facilitate access to primary care closer to where veterans reside, VHA began implementing a system for approving and establishing Community-Based Outpatient Clinics (CBOCs). 

A CBOC is a fixed health care site that is geographically distinct or separate from its parent VA medical facility. A CBOC can be either VA-owned and VA-staffed or contracted to Healthcare Management Organizations (HMO). Regardless of how it is administered, a CBOC must have the necessary professional medical staff, access to diagnostic testing and treatment capability, and the referral arrangements needed to ensure continuity of health care for current or eligible veteran patients. VA policies require all CBOCs to be operated in a manner that provides veterans with consistent, safe, high-quality health care. 

CBOCs are managed at the Veterans Integrated Service Network (VISN) level, and planning and development of a new CBOC is based on the VA's need, available resources, local market circumstances, and veteran preference. 

In FY2010, VA expects to have a total of 833 operational CBOCs throughout the United States and its territories to serve over 2.8 million veteran patients. In addition to primary care, CBOCs provide mental health services, management of acute and chronic medical conditions, and pharmacy benefits, among other services. It should be noted that the type of medical services available at a CBOC can vary from clinic to clinic. 

This report provides an overview of VA's rationale in establishing CBOCs, describes how they are managed and administered, discusses medical services provided at CBOCs, and summarizes what is known about the quality and cost of providing care in CBOCs compared to primary care clinics at VA Medical Centers. Lastly, it describes the process for developing a new CBOC. This report will be updated if events warrant.


Date of Report: January 28, 2010
Number of Pages: 17
Order Number: R41044
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CRS Issue Statement on Medicare Reform

Patricia A. Davis, Coordinator
Specialist in Health Care Financing

Medicare is the nation's federal insurance program that pays for covered health services for most persons 65 years and older and for most permanently disabled individuals under the age of 65 years. It consists of four parts, each responsible for paying for different benefits, subject to different eligibility criteria and financing mechanisms.1 The rising cost of health care, the impact of the aging baby boomer generation, and declining revenues in a weakened economy continue to challenge the program's ability to provide quality and effective health services to its 45 million beneficiaries in a financially sustainable manner. 

Similar to other purchases of health care, Medicare spending has been growing much faster than the general economy, and concerns about Medicare's long-term sustainability continue to intensify. Studies by the Congressional Budget Office, the Medicare Payment Advisory Commission and others attribute most of the cost growth to the development and increasing utilization of new treatments and other forms of medical technology. The Medicare trustees estimate that if Medicare benefits and payment systems remain as they are today, the Hospital Insurance trust fund will become insolvent by 2017. These financial pressures are likely to result in Congress considering changes to control Medicare expenditures, such as reducing provider payments or program benefits, and/or to raise additional revenues, such as through increasing taxes or beneficiary cost-sharing.


Date of Report: January 15, 2010
Number of Pages: 4
Order Number: IS40347
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CRS Issue Statement on Global Health

Tiaji Salaam-Blyther, Coordinator
Specialist in Global Health

Global health has become a major component of U.S. foreign policy and is expected to remain a major policy priority for the 111th Congress. Since the President's Emergency Plan for AIDS Relief (PEPFAR) was launched in FY2004, past Congresses have directed the bulk of global health funds toward global HIV/AIDS programs. The 111th Congress has maintained this practice while boosting funding levels for other global health programs, such as malaria, family planning and reproductive health, and neglected tropical diseases. In the first session, Congress enacted the FY2010 Consolidated Appropriations Act (P.L. 111-117). The Act made almost $8 billion available for global health programs, including some $7 billion for related activities through the Global Health and Child Survival (GHCS) account shared by the U.S. Agency for International Development (USAID) and the Department of State, about $1 billion for the Global Fund through GHCS and the National Institutes for Health, and an estimated $482 million for global health initiatives through the Centers for Disease Control and Prevention. Congress made additional funds available for global health projects through other accounts at the Department of Defense, the Department of State, and USAID.


Date of Report: January 13, 2010
Number of Pages: 3
Order Number: IS40319
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CRS Issue Statement on Drugs, Biologics, and Medical Devices

Erin D. Williams, Coordinator
Specialist in Public Health and Bioethics


The Food and Drug Administration (FDA) is the federal agency responsible for ensuring that drugs, vaccines and other biologics, and medical devices sold in the United States are safe and effective. These products generally require FDA's prior and continuing permission to be marketed. Ideally, the agency's actions must be sufficient to ensure that vital new medical products are indeed safe and effective, but not so rigorous and burdensome as to delay or prevent the public's access to such products.

In 2007, Congress enacted a major FDA reform and reauthorization law: the Food and Drug Administration Amendments Act of 2007 (FDAAA; P.L. 110-85). FDAAA reauthorized FDA's authority to collect industry user fees for human drugs and devices that help pay for its regulatory activities. Among many other provisions, FDAAA also strengthened the agency's authority over drug safety, created new incentives for the development of pediatric medical devices, and mandated the public disclosure of clinical trials data.

In 2009, Congress passed the Family Smoking Prevention and Tobacco Control Act, which gave the FDA regulatory authority over tobacco products. Among other responsibilities, the Family Smoking Prevention and Tobacco Control Act requires tobacco product manufacturers to register with FDA, replaces existing health warning labels with larger labels, requires the FDA to establish good manufacturing practices for tobacco product manufacturers, and mandates that tobacco product manufacturers seek FDA approval before marketing tobacco products with reduced-risk or reduced-exposure claims, such as the descriptors "light," "mild," and "low."


Date of Report: January 14, 2010
Number of Pages: 5
Order Number: IS40296
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CRS Issue Statement: Abortion, Family Planning, and Reproductive Health

Congress has maintained a longstanding interest in abortion since 1973 when the U.S. Supreme Court first recognized that a woman has a constitutional right to choose whether to terminate her pregnancy. Since the Court's decision in Roe v. Wade, there have been numerous efforts in Congress to restrict the availability of abortion through proposed constitutional and statutory amendments, and through funding restrictions attached to appropriations and authorizations measures. The availability of insurance coverage for elective abortions has also been an issue in the ongoing debate over health reform. Bills that would establish constitutional protection for entities at all stages of life, provide funds for international family planning organizations, and address the abridgement of state parental consent and notification requirements may be considered by Congress during the second session of the 111th Congress.

Legislation that attempts to reduce the number of uninsured individuals and restructure the private health insurance market has been passed by both the House of Representatives and the Senate. The House- and Senate-passed measures include provisions that address the coverage of abortion by health benefits plans that would be available through a health insurance exchange. The abortion provisions have been controversial, particularly with regard to the use of federal affordability credits or premium subsidies to obtain health coverage that includes coverage for elective abortion services. Under the House-passed bill, an individual who receives an affordability credit could not purchase a health benefits plan that includes coverage for elective abortions or separate supplemental coverage for such abortions with a premium payment that has benefited from an affordability credit. In contrast, under the Senate-passed measure, an individual who receives a premium assistance credit or cost-sharing reduction would be permitted to purchase a health benefits plan that includes coverage for elective abortions. The Senate-passed measure, however, would require compliance with payment and accounting requirements that would ensure that funds attributable to a premium subsidy are not used to pay for elective abortion services. In addition to addressing the coverage of elective abortions, both measures also provide for conscience protection and the preservation of certain state and federal abortion-related laws.

Bills that would redefine terms such as "human person" and "human being" to include entities at all stages of life for the purpose of recognizing constitutional protections for such entities have already been introduced in the first session of the 111th Congress. Measures such as the Life at Conception Act, the Right to Life Act, and the Sanctity of Human Life Act may be considered in the second session. The legitimacy of such measures, however, has been questioned by some legal scholars who contend that Congress cannot overrule the Supreme Court's conclusion that a "person" does not include the unborn. Such a change, they argue, would require a constitutional amendment.
Congress may consider proposals designed to prevent the abridgement of state parental consent and notification requirements. The Child Interstate Abortion Notification Act (CIANA) and the Child Custody Protection Act would prohibit the knowing transport of a minor across state lines with the intent that the minor obtain an abortion. Both measures have been introduced in past Congresses. In the 109th Congress, the House and Senate passed different versions of the CIANA, but were unable to reach agreement on a final bill.

Congress is expected to consider abortion and abortion-related matters in the context of appropriations for various federal agencies. Longstanding funding restrictions related to abortion, for example, have been included in annual foreign operations appropriations measures. Two issues in particular—the Mexico City policy involving funding for foreign non-governmental organizations, and restrictions on funding for the U.N. Population Fund (UNFPA) because of its alleged activities in China—have remained controversial and continue to be prominently featured in the family planning and abortion debate. These policies may be reevaluated in light of the 2008 election and the increased Democratic majority in Congress.
The so-called Dornan Amendment, which restricted the use of District of Columbia funds to pay for abortions sought by low-income women, was not included in the FY2010 appropriations for the District. The Dornan Amendment had been included in the annual appropriations measures for the District since 1988. Efforts to restore the Dornan Amendment to the District's appropriations for FY2011 are expected in the second session.
Finally, in the second session, Congress will likely consider a variety of issues involving family planning and reproductive health. Legislation related to family planning and Title X of the Public Health Service Act, including appropriations measures that could affect the funding of Title X family planning initiatives, is expected.

Abortion: Court Decisions, Legislation

Abortion Law Development: A Brief Overview

Jon O. Shimabukuro

95-724

Abortion: Legislative Response

Jon O. Shimabukuro

RL33467

Abortion and the House- and Senate-Passed Health Reform Measures

Jon O. Shimabukuro

R41013

Health Care Providers' Religious Objections to Medical Treatment: Legal Issues

Related to Religious Discrimination in Employment and Conscience Clause Provisions

Cynthia Brougher, Edward C. Liu

R40722

The History and Effect of Abortion Conscience Clause Laws

Jon O. Shimabukuro

RL34703

Partial-Birth Abortion: Recent Developments in the Law

Jon O. Shimabukuro

RL30415

The Nomination of Judge Sonia Sotomayor: A Review of Second Circuit Decisions

Relating to Reproductive Rights

Jon O. Shimabukuro

R40694

Reproductive Health

Title X (Public Health Service Act) Family Planning Program

Angela Napili

RL33644

Emergency Contraception: Plan B

Judith A. Johnson, Vanessa K. Burrows

RL33728

Teenage Pregnancy Prevention

Reducing Teen Pregnancy: Adolescent Family Life and Abstinence Education Programs

Carmen Solomon-Fears

RS20873

Teen Pregnancy Prevention: Background and Proposals in the 111th Congress

Carmen Solomon-Fears

R40618

Teenage Pregnancy Prevention: Statistics and Programs

Carmen Solomon-Fears

RS20301

Scientific Evaluations of Approaches to Prevent Teen Pregnancy

Carmen Solomon-Fears

RS22656

International Family Planning Assistance

International Population Assistance and Family Planning Programs: Issues for Congress

Luisa Blanchfield

RL33250

The U.N. Population Fund: Background and the U.S. Funding Debate

Luisa Blanchfield

RL32703

Date of Report:
January 15, 2010
Number of Pages: 5
Order Number: R40251
Price: $0.00 (FREE)

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Medicaid and the Children’s Health Insurance Program (CHIP) Provisions in H.R. 3590, as Passed by the Senate

Kelly Wilkicki, Coordinator
Presidential Management Fellow

Evelyne P. Baumrucker
Analyst in Health Care Financing

Cliff Binder
Analyst in Health Care Financing

Elicia J. Herz
Specialist in Health Care Financing

Julie Stone
Specialist in Health Care Financing


This report summarizes key provisions applicable to Medicaid and the Children's Health Insurance Program (CHIP) in H.R. 3590, the Patient Protection and Affordable Care Act, as passed by the Senate on December 24, 2009. In general, the bill would expand health insurance coverage to many Americans who currently are uninsured, while attempting to reduce expenditures and offering mechanisms to increase care coordination, encourage more use of health prevention, and improve quality of care. The bill would reform the private health insurance market, impose a mandate for most legal U.S. residents to obtain health insurance, establish health insurance "Exchanges" that would subsidize health insurance coverage for eligible individuals; expand Medicaid eligibility; create programs to improve quality of care and encourage more use of preventive services; address healthcare workforce issues; and propose a number of other Medicaid and Medicare program and federal tax code changes. 

Among the proposed Medicaid reforms, the bill would modify eligibility standards and methodologies, add several new mandatory and optional Medicaid benefits, expand Medicaid benefits, and increase CHIP funding. Beginning in 2014, or sooner at state option, nonelderly, non-pregnant individuals with income below 133% of the federal poverty level (FPL) would become eligible for Medicaid. New optional eligibility groups also would be added, such as nonelderly, non-pregnant individuals (childless adults) with income above 133% of poverty. The bill also would require states to maintain current coverage levels for individuals under Medicaid and CHIP. In addition, the bill would add several new mandatory Medicaid benefits including coverage of services in free standing birth clinics, and coverage of tobacco cessation services for pregnant women. 

The bill would make a number of Medicaid and CHIP financing changes, such as reducing Medicaid disproportionate share hospital (DSH) payments, increasing prescription drug rebates and increasing certain pharmacy reimbursement, increasing federal spending for the Territories, providing special enhanced disaster recovery Medicaid funding, and requiring payment system reforms. 

The bill includes provisions that would give states and other stakeholders new program integrity (PI)—waste, fraud and abuse—enforcement and monitoring tools as well as impose some new data reporting and oversight requirements on states and providers. Additional PI provisions affecting Medicaid and CHIP include requirements for states to implement a national correct coding initiative similar to the Medicare program, a broad new nursing home accountability initiative, and other new requirements to enhance PI that increase the uniformity of Medicare, Medicaid, and CHIP requirements. 

The bill also offers opportunities for states and other stakeholders to use new demonstrations and grants to modify payment systems, introduce care delivery models, and improve care quality, which include a medical global payment system demonstration and school-based health center grants.


Date of Report: January 20, 2010
Number of Pages: 72
Order Number: R41037
Price: $29.95

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EMTALA: Access to Emergency Medical Care

Edward C. Liu
Legislative Attorney


The Emergency Medical Treatment and Active Labor Act (EMTALA) ensures universal access to emergency medical care at all Medicare participating hospitals with emergency departments. Under EMTALA, any person who seeks emergency medical care at a covered facility, regardless of ability to pay, immigration status, or any other characteristic, is guaranteed an appropriate screening exam and stabilization treatment before transfer or discharge. Failure to abide by these requirements can subject hospitals or physicians to civil monetary sanctions or exclusion from Medicare. Hospitals may also be subject to civil liability under the statute for personal injuries resulting from the violation.


In 1986, Congress enacted the Emergency Medical Treatment and Active Labor Act (EMTALA)1 to address the problem of "patient dumping" in hospital emergency departments. Patient dumping refers to instances in which a hospital turns away indigent or uninsured persons seeking treatment so that the hospital will not have to absorb the cost of treating them. Although attempts to facilitate indigent access to emergency health care already existed in state and federal law, legal frameworks prior to EMTALA were plagued with poor enforcement mechanisms and vague standards of conduct.2 Amid graphic media reports of hospitals sending away critically ill patients without proper stabilization treatment and delivery rooms unwilling to accept indigent or uninsured women in labor, Congress passed EMTALA as part of the Consolidated Omnibus Budget Reconciliation Act of 1985.3 

EMTALA's statutory scheme has traditionally been deconstructed into two principal categories: (1) provisions that ensure an appropriate medical screening, and (2) provisions that require stabilization before transfer or discharge.4 EMTALA only requires stabilization of whatever emergency conditions a hospital detects, and does not provide a right to indefinite care for anyone who comes to an emergency room. EMTALA's requirements may be suspended by the Secretary of Health and Human Services during national emergencies, such as the recent landfall of Hurricane Ike in Texas.5 Hospitals and physicians that fail to comply with these requirements may be fined $50,000 and/or excluded from participation in Medicare, and hospitals may also be held civilly liable to persons who suffer personal injury


Date of Report: January 12, 2010
Number of Pages: 10
Order Number: RS22738
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CRS Issue Statement on Private Health Insurance Reform

Bernadette Fernandez, Coordinator
Analyst in Health Care Financing


Seven out of ten Americans have health coverage through the private health insurance market. Access to such coverage is an ongoing concern for legislators and other policymakers as the cost of health care continues to rise and more individuals experience problems obtaining private coverage to help pay those costs. To assist individuals, families, and employers in obtaining health coverage, the 111th Congress will continue to consider health reform legislation. 

Broad health reform efforts attempt to simultaneously improve the health care we receive, and change the ways and how much we pay for it. The last time Congress considered comprehensive health reform was in 1993-94. While comprehensive reform was not passed, Congress enacted a number of incremental health reforms during the intervening years. Nonetheless, job-based health insurance premiums have more than doubled since the early 1990s, and the number of persons without health coverage continues to increase. Given these trends, the current debate over health reform focuses primarily on the expansion of health insurance coverage (both private and public) and containment of costs. Other health care issues, such as changing the way care is delivered to improve quality and increase efficiency, has also been included as part of comprehensive reform.


Date of Report: January 14, 2010
Number of Pages: 4
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Health Insurance Coverage of People Aged 55 to 64: Implications for a Medicare Buy-In

Chris L. Peterson
Specialist in Health Care Financing

Mark Newsom
Analyst in Health Care Financing


Approximately 4.3 million adults between the ages of 55 and 64 were estimated to be without health insurance in 2008, according to the U.S. Census Bureau's Current Population Survey (CPS). This amounts to approximately one out of eight (12.5%) of these adults, often called the "near elderly." 

The near elderly have the lowest uninsured rate among adults aged 19 to 64. This may be driven, at least in part, by where this group is in their life cycle. At this point in their lives, many of the near elderly may be in their peak earning years and be able to access employer-sponsored coverage. At the same time, however, many may be facing important and personally unprecedented health and work decisions, some of which could undermine their access to employer-sponsored coverage. These decisions may be affected by some new challenges this age group faces at this point in their lives: (1) a greater prevalence of chronic conditions; (2) a greater likelihood of certain acute conditions, such as a heart attack and stroke; and (3) more assets to protect from catastrophic health care costs. This report shows that the near elderly are significantly more likely than other nonaged adults to be in fair or poor health, and to have had a heart attack or stroke. More than two-thirds of the near elderly (68.0%) have one of six chronic conditions, a significantly higher percentage than even the next highest age group, 45- to 54-yearolds (51.2%). The near elderly are also more likely to have assets, compared with all other nonaged adult age groups. 

Average per capita health care spending among the near elderly in 2004 ($7,787) was 50% more than among 45- to 54-year-olds ($5,210) and more than double that of 19- to 44-year-olds ($3,370). These spending levels carry over into their health insurance costs. In the nongroup market in 2009, the near elderly faced deductibles averaging $3,022 and annual premiums averaging $5,349. This average premium level exceeded those faced by 45- to 54-year-olds by more than $1,500, and was nearly triple the premiums for 25- to 34-year-olds. The near elderly were more likely than their younger adult counterparts to spend more than 10% of their after-tax income on health care and health insurance premiums. In fact, for those with private nongroup coverage, 69% of the near elderly were in families that spent more than 10% of their after-tax income on health care and health insurance premiums. 

Compared with uninsured 25- to 54-year-olds, the 4.3 million near elderly uninsured are more likely to be female or native-born. This is true even after accounting for underlying population differences between the near elderly and 25- to 54-year-olds. The near elderly uninsured are also more likely to have a household income below $25,000 and to be in poor or fair health. 

Uninsurance can have more severe consequences for the near elderly, considering their increased needs for health care and asset protection. Yet, even the near elderly who have health insurance face much greater financial burdens from these costs than younger adults. 

Extending Medicare eligibility has been one legislative proposal to protect this population from being uninsured or subject to the high costs of the individual insurance market. To keep costs down for the government, it has been proposed that the expansion involve buying into Medicare by paying premiums that cover the actuarial cost of the program. Depending on the specifics of the program, a Medicare Buy-In could raise several potential issues, including adverse selection, high costs to the beneficiary or to the government, additional financial pressures on health care providers and health insurance companies, and incentives for retiring early.


Date of Report: January 14, 2010
Number of Pages: 24
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Limiting McCarran-Ferguson Act’s Antitrust Exemption for the “Business of Insurance”:Impact on Health Insurers and Issuers of Medical Malpractice Insurance

Janice E. Rubin
Legislative Attorney
Baird Webel
Specialist in Financial Economics


Narrowing or eliminating the 1945 McCarran-Ferguson Act's antitrust exemption for the "business of insurance" has been pursued for many years in many Congresses. In the 111th Congress, there are at least three measures—two stand-alone bills, and a provision in the House health care reform bill. Unlike prior legislation to eliminate the entire exemption—currently applicable generally to the extent such business is regulated by state law—however, the pending measures (H.R. 3596, S. 1681 (each titled the Health Insurance Industry Antitrust Enforcement Act of 2009); section 262 of H.R. 3962 (the Affordable Health Care for America Act)) are applicable only to the provision of health and medical malpractice insurance. The stand-alone bills would prohibit issuers of such insurance from engaging in "price fixing, bid rigging, or market allocations in connection with the conduct of the business of providing" health or medical malpractice insurance. Section 262 of H.R. 3962 does not specify particular, prohibited activities, mandating instead that nothing in McCarran-Ferguson shall prevent the application of "the antitrust laws to the business of health [or medical malpractice] insurance." 

H.R. 3596 was voted out of the House Judiciary Committee on October 21, 2009, with an amendment to permit the sharing of historical loss data or the "perform[ance of] actuarial services" if doing so "does not involve a restraint of trade." Hearings have been held on S. 1681, but the bill remains in the Senate Judiciary Committee; whether it will ultimately contain a provision concerning information-sharing is unknown, as is the likelihood that its substance will be inserted in any final health care reform bill. Section 262 of H.R. 3962 contains language similar to the information-sharing provision in H.R. 3596, including a section to define several of the terms used in granting that authority. There is not currently any provision in the Senate health care reform bill (H.R. 3590) as passed by the Senate on December 24, 2009. Due largely to the importance of information sharing to insurers, the insurance industry has cooperated in the past in a variety of ways, including sharing loss information, jointly developing policy forms and rates, operating residual market mechanisms, and participating in state guaranty funds. Some forms of cooperation, including publication of mandatory advisory rates, have already been curtailed because of antitrust concerns. 

Passage of any of the measures is likely to precipitate litigation to define the scope of the prohibition and/or any remaining exemption. The precise impact on the affected portion of the insurance industry will depend critically, therefore, on future court decisions. 

Notwithstanding any limitation imposed at the federal level on the McCarran-Ferguson antitrust exemption available to health and medical malpractice insurers, however, any activity that the subject insurance companies currently (or might in the future) undertake—including joint ratemaking or certain information-sharing—may nevertheless remain legally permissible. The "state action" doctrine in antitrust law immunizes from the federal antitrust laws: (1) all actions of state (but not necessarily, municipal) public entities and (2) those of private entities that are legislatively mandated or authorized and are "actively supervised" by the states. Currently, all states regulate the insurance industry. The issue, then, is whether and to what extent existing state mandates or authorizations, while adequate to meet the requirements of the McCarran-Ferguson exemption, would be adequate to meet the requirements of the antitrust "state action" doctrine, which dictates both that there be a "clear articulation" of state policy, and that a state engage in "active supervision" of the private activity that occurs in response to that articulation. This report will be updated as necessary. .


Date of Report: January 14, 2010
Number of Pages: 12
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Public Health, Workforce, Quality, and Related Provisions in H.R. 3962

C. Stephen Redhead, Coordinator
Specialist in Health Policy


Health care reform is at the top of the domestic policy agenda for the 111th Congress, driven by concerns about the growing ranks of the uninsured and the unsustainable growth in spending on health care and health insurance. Improving access to care and controlling rising costs are seen to require changes to both the financing and delivery of health care. Experts point to a growing body of evidence of the health care system's failure to consistently provide high-quality care to all Americans. 

The health reform debate has encompassed a number of proposals to address these challenges and improve the delivery of health care services. They include initiatives to encourage individuals to adopt healthier lifestyles, and to change the way that physicians and other providers treat and manage disease. Delivery reform proposals focus on expanding the primary care workforce, encouraging the use of clinical preventive services, and strengthening the role of chronic care management. Health care delivery reform relies on putting mechanisms in place to drive change in the systems of care. Key drivers include performance measurement and the public dissemination of performance information, comparative effectiveness research, adoption of health information technology, and, most important, the alignment of payment incentives with highquality care. In February 2009, Congress enacted the Health Information Technology for Economic and Clinical Health (HITECH) Act to promote the widespread adoption of electronic health records for sharing of clinical data among hospitals, physicians, and other health care stakeholders. 

On November 7, 2009, by a vote of 220-215, the House passed a comprehensive health reform bill, the Affordable Health Care for America Act (H.R. 3962). The legislation, introduced by Representative Dingell on October 29, 2009, is based on an earlier measure, the America's Affordable Health Choices Act of 2009 (H.R. 3200), which was jointly developed and reported by the House Committees on Ways and Means, Energy and Commerce, and Education and Labor. This report, one of a series of CRS products on H.R. 3962, summarizes the bill's workforce, prevention, quality, and related provisions. 

H.R. 3962 includes numerous provisions intended to increase the primary care and public health workforce, promote preventive services, and strengthen quality measurement, among other things. The legislation would amend and expand on many of the existing health workforce programs authorized under Title VII (health professions) and Title VIII (nursing) of the Public Health Service Act (PHSA). It would create a Public Health Workforce Corps and establish a new loan repayment program, modeled on the National Health Service Corps (NHSC), for individuals who agree to practice in medically underserved areas with unmet health care needs. The bill also would make a number of changes to the Medicare graduate medical education (GME) payments to teaching hospitals, in part to encourage the training of more primary care physicians. 

In addition, H.R. 3962 would bolster quality improvement activities, including performance measurement, and broaden Medicare and Medicaid coverage of clinical preventive services. The legislation would establish a multi-billion dollar Public Health Investment Fund to provide additional funding for these and other new programs and activities.


Date of Report: January 20, 2010
Number of Pages: 79
Order Number: R40892
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Community Living Assistance Services and Supports (CLASS) Provisions in H.R. 3962 and Senate-Passed H.R. 3590

Janemarie Mulvey
Specialist in Aging Policy

Kirsten J. Colello
Specialist in Health and Aging Policy


Under current law, the majority of paid long-term care (LTC) services are funded by public programs, such as Medicaid and Medicare. However, these programs are limited in scope and continue to face increased financial pressures. Although private LTC insurance is available to provide some financial protection against an individual's risk of the potentially high cost of LTC, less than 10% of individuals aged 50 and older own such a policy. Thus, for the majority of older Americans, the out-of-pocket cost of obtaining paid help for these services may far exceed their financial resources. To address gaps in LTC coverage and assist individuals and families in paying for such services, the House and Senate have each passed their versions of comprehensive health care reform legislation that include the establishment of a national voluntary LTC insurance program entitled the Community Living Assistance Services and Supports (CLASS) program. On the House side, these provisions appear in the Affordable Health Care for America Act (Sections 2561 of H.R. 3962) passed on November 7, 2009. On the Senate side, similar provisions are included in the Patient Protection and Affordable Care Act (Sections 8001 and 8002 of H.R. 3590), passed on December 24, 2009. 

Both the House and Senate bills are similar with respect to benefit determination, eligibility, enrollment, oversight and administration of the CLASS program. Specifically, both would allow employed individuals aged 18 and older to voluntarily enroll in the CLASS program. CLASS enrollment would not be subject to underwriting so coverage would be available to all persons who enroll regardless of pre-existing conditions. The CLASS program would provide employers the option to automatically enroll their employees in the new voluntary publicly administered LTC insurance program through payroll deductions. Employees would then have the opportunity to "opt-out" if they do not want to participate. One key difference between the proposals is that the House bill would allow non-working non-institutionalized spouses of employed workers to enroll in the CLASS program; the Senate bill does not have this provision. The bills also differ with respect to the authorities given to the Secretary of Health and Human Services and the Secretary of Treasury. 

Premiums for the CLASS program would be determined by the Secretary of Health and Human Services (HHS) based on 75-year actuarial estimates of expected future use and expenditures. After a five-year vesting period, eligibility for benefits from the CLASS program would be based on the existence of a functional or cognitive impairment that lasts for at least 90 days and that would be certified by a licensed health care practitioner. Benefits to eligible recipients would include a cash benefit of at least $50 a day and would vary based on the degree of the beneficiary's functional or cognitive impairment. Other benefits of the CLASS program would include advocacy services and advice and assistance counseling on accessing and coordinating LTC services. The key difference in premiums between the two proposals would be that the Senate proposal includes explicit premium subsidies for workers with incomes below the federal poverty line and full-time students at the ages of 18 to 21 who currently are working. 

This report discusses the cost and financing for LTC services as well as the current market for private LTC insurance; compares the CLASS provisions in both the House and Senate health care reform legislation and identifies key differences between the two bills; and discusses the federal budget implications of the proposed CLASS program, as estimated by the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Services (CMS).


Date of Report: January 15, 2010
Number of Pages: 18
Order Number: R40842
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Health Care Providers’ Religious Objections to Medical Treatment: Legal Issues Related to Religious Discrimination in Employment and Conscience Clause Provisions

Cynthia Brougher
Legislative Attorney

Edward C. Liu
Legislative Attorney


Federal law provides various legal protections for individuals who object for religious reasons to performing certain tasks required by their employer. The First Amendment to the U.S. Constitution and statutory nondiscrimination laws provide general protection to individuals wishing to exercise their religious beliefs without interference from the government or employers. An individual's right of refusal may also be protected by specific legislation known as "conscience clauses." These protections often arise with health care providers, including doctors and pharmacists, who object to assisting with certain reproductive procedures or dispensing birth control. Most often, objections are raised by doctors or hospitals who object to performing abortion procedures because of religious beliefs or affiliations. 

In December 2008, the Department of Health and Human Services (HHS) issued a final rule to ensure compliance with conscience clauses enacted beginning in the 1970s to protect individuals who object to abortion procedures. The rule delineates the protections offered by the Church Amendment, Section 245 of the Public Health Service Act, and the Weldon Amendment, each of which generally provides that individuals or entities receiving federal funding may not be required to perform abortion procedures if they have religious or moral objections to such procedures. The effect that this regulation would have on the existing legal protections available to those with objections to employment duties based on religion has been controversial. The debate over the extent of protection available to medical providers with religious objections to certain treatments highlights the tension between patients' access to treatment and health providers' religious freedom. 

This report will discuss situations in which religious objections may be raised in health care. The report will examine the legal protections for individuals with religious and moral objections to their employment duties offered by the Free Exercise Clause of the First Amendment, Title VII of the Civil Rights Act of 1964, and federal conscience clauses. Finally, the report will analyze the two sets of protections and how they may affect health care providers who have religious objections to medical procedures. 

In the 111th Congress, health care reform legislation passed in the House (H.R. 3962) and the Senate (H.R. 3590) also contains conscience protections for health care providers' and insurers' objections to abortion. The Senate legislation also provides protections for refusals to participate in assisted suicide. 


Date of Report: January 14, 2010
Number of Pages: 14
Order Number: R40722
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Health Reform and the 111th Congress

Hinda Chaikind
Specialist in Health Care Financing


The health reform debate in the 111th Congress continued and expanded upon the work begun in the 110th Congress. On November 12, 2008, the Chairman of the Senate Finance Committee, Senator Baucus, released a white paper detailing his principles for health reform. This provided a framework for work within the committee for the 111th Congress. Several bills were introduced when the 111th Congress first convened, and these bills focused on a broad spectrum of approaches to health reform. 

On November 7, 2009, the House passed H.R. 3962, the Affordable Health Care for America Act. H.R. 3962 is based on H.R. 3200, America's Affordable Health Choices Act of 2009, which was originally introduced on July 14, 2009, and was reported separately on October 14, 2009, by three House Committees—Education and Labor, Energy and Commerce, and Ways and Means. The U.S. Senate passed its version of health insurance reform on December 24, 2009, the Patient Protection and Affordable Care Act, in H.R. 3590, as amended by the Senate (hereafter referred to simply as H.R. 3590). H.R. 3590 consolidated and amended bills passed by the two committees with principal jurisdiction, the Committee on Health, Education, Labor, and Pensions, which ordered reported S. 1679, the Affordable Health Choices Act on July 15, and the Senate Finance Committee, which ordered reported S. 1796, America's Healthy Future Act of 2009, on October 19, 2009. The House and Senate must agree to the same measure with the same legislative language before a bill can be presented to the President. 

The health reform bills passed by the House and Senate focus on simultaneously expanding private and public coverage options. Some of the other bills introduced in the 111th Congress take a similar approach to health reform. Additionally, other bills have focused on other solutions, attempting to expand coverage using one of the following approaches: 

• Largely replace existing coverage with a national government-provided health insurance program (or a national health service). 

• Expand existing public programs for certain individuals. 

• Expand privately sponsored coverage. 

• Encourage state-based reforms. 

• Simultaneously expand private and public coverage options. 

This report presents basic background on health insurance that may be useful to legislators considering health insurance reforms. It describes reform approaches and provides brief descriptions of health insurance reform bills introduced in the 111th Congress, as well as some of the general principles currently being considered by the Congress. The potential impact of the various approaches and bills is not analyzed in this report, however. As a result, it does not provide evaluations of how well different bills, once enacted, would meet their objectives. This report will be updated periodically to reflect recent congressional activity in health reform.


Date of Report: January 14, 2010
Number of Pages: 28
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The Effect of No Social Security COLA on Medicare Part B Premiums

Jim Hahn
Analyst in Health Care Financing

Alison M. Shelton
Analyst in Social Security


The Social Security Administration announced on October 15, 2009, that there will be no Social Security cost-of-living adjustment (COLA) in 2010. Current projections indicate that there will be no COLA in 2011, either. Over the same period, total Medicare Part B program costs and associated premiums are expected to increase. Part B premiums, which are automatically deducted from Social Security checks for those who receive Social Security, must cover 25% of projected Part B costs. The Social Security Act includes a provision that holds most Social Security beneficiaries harmless for increases in the Medicare Part B premium: affected beneficiaries' Part B premiums are reduced to ensure that their Social Security checks do not decline from one year to the next. In a typical year, the hold harmless provision affects a small fraction of beneficiaries and has a limited impact on program finances. However, in a scenario where Medicare Part B premiums increase but Social Security benefits do not, the effects of the hold harmless provision are larger and more complex. 

The absence of a Social Security COLA affects Medicare Part B premiums in two ways under current law. For about three-quarters of Part B participants, the hold harmless provision would prevent their Part B premiums from increasing, and so the amount of their Social Security checks would remain flat, all other things being equal. Under current law, the only way to collect the 25% of Part B costs that are required to be covered by beneficiary premiums would be to increase Part B premiums on beneficiaries who are not protected by the hold harmless provision. The onequarter of beneficiaries who are not held harmless would shoulder the entire beneficiary share of the increase in Part B costs. In other words, their collective premium increase could be nearly four times greater than if there were no hold harmless provision. 

The one-quarter of Part B enrollees to whom the hold harmless provision would not apply can be divided into three groups: (1) low-income beneficiaries whose Part B premiums are not withheld from their Social Security benefits but instead are fully paid by the Medicaid program (currently about 17.5% of Part B enrollees, expected to increase); (2) high-income beneficiaries who are subject to income-related Part B premiums (about 5% of Part B enrollees); and (3) beneficiaries for whom there is insufficient history of Social Security payments with corresponding deductions for the Part B premium, which would include both new enrollees and those not receiving Social Security benefit checks (about 5% of Part B enrollees). 

The substantial majority (17.5%) of those not held harmless are low-income beneficiaries whose Part B premiums are paid by Medicaid. As a result, in the absence of any intervention by Congress, most of the cost of the increase in Part B premiums in 2010 and 2011 would be paid by the federal-state Medicaid program, not directly by beneficiaries. About 5% of Part B enrollees— those enrollees who pay income-related premiums—will likely see higher Part B premiums and a corresponding decline in their Social Security benefits compared with the previous year. An additional 5% (the new enrollees and Part B enrollees who do not participate in Social Security who voluntarily elect Part B) will pay premiums that are higher than they would be but for this unusual situation. 

In the absence of a Social Security COLA, the Supplementary Medical Insurance trust fund, which finances Part B, is at increased risk of exhaustion unless Part B premiums are raised substantially on those who are not held harmless or Congress takes other action. As of the date of this report, Congress has not passed legislation to address this issue.


Date of Report: January 20, 2010
Number of Pages: 13
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CRS Issue Statement on ADA and Civil Rights of Individuals with Disabilities

Nancy Lee Jones, Coordinator
Legislative Attorney

Kenneth R. Thomas
Legislative Attorney

Dennis M. Roth
Specialist in Labor Economics

Carol J. Toland
Legislative Attorney

Scott Szymendera
Analyst in Disability Policy

Ann Lordeman
Specialist in Social Policy

Vastine D. Platte
Information Research Specialist


The Americans with Disabilities Act (ADA), the major civil rights statute prohibiting discrimination against individuals with disabilities, has been the subject of congressional interest since its enactment in 1990. On September 25, 2008, P.L. 110-325, the ADA Amendments Act was enacted to reject narrow Supreme Court interpretations of the definition of disability. Proposed regulations implementing this new law have been published and there will most likely be congressional oversight regarding the final regulations. The ADA Amendments Act contains a conforming amendment for section 504 of the Rehabilitation Act and implementation of this change, especially with regard to education, may also be the subject of congressional oversight. 

Congress maintains a continuing interest in other ADA oversight issues, especially in the areas of emergency response and preparedness and influenza pandemics, including the current H1N1 influenza pandemic. In addition, Congress has also been concerned about the issue of vexatious lawsuits under the ADA, and legislation (H.R. 2397) has been introduced in the 111th Congress


Date of Report: January 12, 2010
Number of Pages: 2
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Health Insurance Premium Credits in Senate-Passed H.R. 3590

Chris L. Peterson
Specialist in Health Care Financing


This report describes the "premium assistance credits" to help certain individuals pay for health insurance in H.R. 3590, the Patient Protection and Affordable Care Act, as passed by the Senate on December 24, 2009. Under the bill, state-established "American Health Benefit Exchanges" would have to be established in every state by January 1, 2014. Exchanges would not be insurers, but would provide qualified individuals and small businesses with access to insurers' qualified health plans in a comparable way. Only for purchase of coverage within an exchange, advanceable, refundable premium assistance credits would be available to limit the amount of money some individuals would pay for premiums.1 This report describes who is eligible for the premium credits, how the credits are calculated, and how individuals' income is counted for determining credit eligibility. 

The guideline against which income would be compared to determine credit eligibility is referred to generally as the federal poverty line (FPL). Although the premium credits within exchanges would not be available until 2014 under H.R. 3590, the illustrations provided in this report are based on current (2009) FPLs, to reflect how the premium credits would compare to families' current income levels—essentially, "if the premium credits were available today."


Date of Report: January 5, 2010
Number of Pages: 8
Order Number: R40935
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Pharmaceutical Patent Litigation Settlements: Implications for Competition and Innovation

John R. Thomas
Visiting Scholar


Although brand-name pharmaceutical companies routinely procure patents on their innovative medications, such rights are not self-enforcing. Brand-name firms that wish to enforce their patents against generic competitors must commence litigation in the federal courts. Such litigation ordinarily terminates in either a judgment of infringement, which typically blocks generic competition until such time as the patent expires, or a judgment that the patent is invalid or not infringed, which typically opens the market to generic entry. 

As with other sorts of commercial litigation, however, the parties to pharmaceutical patent litigation may choose to settle their case. Certain of these settlements have called for the generic firm to neither challenge the brand-name company's patents nor sell a generic version of the patented drug for a period of time. In exchange, the brand-name drug company agrees to compensate the generic firm, often with substantial monetary payments over a number of years. Because the payment flows counterintuitively, from the patent proprietor to the accused infringer, this compensation has been termed a "reverse" payment. 

Commentators have differed markedly in their views of reverse payment settlements. Some observers believe that they are a consequence of the specialized patent litigation procedures established by the Hatch-Waxman Act. Others have concluded that when one competitor pays another not to market its product, such a settlement is anti-competitive and a violation of the antitrust laws. 

Since 2003, Congress has required that litigants notify federal antitrust authorities of their pharmaceutical patent settlements. That legislation did not dictate substantive standards for assessing the validity of these agreements under the antitrust law, however. That determination was left to judicial application of general antitrust principles. Facing different factual patterns, some courts have concluded that a particular reverse payment settlement constituted an antitrust violation, while others have upheld the agreement. 

Congress possesses a number of alternatives for addressing reverse payment settlements. One possibility is to await further judicial developments. Another option is to regulate the settlement of pharmaceutical patent litigation in some manner. In the 111th Congress, S. 369, the Preserve Access to Affordable Generics Act, would establish a presumption that certain reverse payment settlements are unlawful. S. 369 then establishes relevant factors to be weighed in deciding whether that presumption has been overcome through a showing that the procompetitive benefits of the settlement outweigh its anticompetitive effects. 

This report will be updated as needed.


Date of Report: January 6, 2010
Number of Pages: 23
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Comparison of Division B Provisions of H.R. 3962 (as passed by the House) and Related Provisions in H.R. 3590 (as passed by the Senate)

Tricia Davis
Specialist in Health Care Financing


To assist Members of Congress, Committees and staff in comparing the House-passed and Senate-passed health reform bills, CRS has compiled 5 memorandums that together describe all of the health-related provisions in the bills. Each memorandum provides side-by-side comparisons of a subset of the provisions. The memorandums focus on Medicaid, Medicare, private health insurance, Indian health, and public health and workforce development. Each of the five memorandums compare current law to the proposed changes in the House-passed H.R. 3962 and the Senate-passed H.R. 3590. As H.R. 3962 was the first bill to pass the Congress, these memorandums describe provisions in order of the House bill's table of contents. 

This memorandum includes all provisions in H.R. 3962 Division B-Medicare and Medicaid Improvements and related provisions in the Senate-passed H.R. 3590, with the exception of Title VII – Medicaid and CHIP (included in a separate CRS memo) and Title VIII – Revenue-Related Provisions. 

All comparable Senate bill provisions are provided in the column next to the related House provision, with similarities and differences explained. Non-matching Senate provisions are provided at the bottom of the subject appropriate table.

Date of Report: January 13, 2010
Number of Pages: 343
Order Number: M-011310
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The Americans with Disabilities Act (ADA) Coverage of Contagious Diseases

Nancy Lee Jones
Legislative Attorney


The Americans with Disabilities Act (ADA), 42 U.S.C. §§12101 et seq., provides broad nondiscrimination protection for individuals with disabilities in employment, public services, public accommodations and services operated by private entities, transportation, and telecommunications. As stated in the act, its purpose is "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." Due to concern about the spread of highly contagious diseases such as pandemic influenza and extensively drug-resistant tuberculosis (XDR-TB), questions have been raised about the application of the ADA in such situations. Generally, individuals with serious contagious diseases would most likely be considered individuals with disabilities. However, this does not mean that an individual with a serious contagious disease would have to be hired or given access to a place of public accommodation if such an action would place other individuals at a significant risk. Such determinations are highly fact specific and the differences between the contagious diseases may give rise to differing conclusions since each contagious disease has specific patterns of transmission that affect the magnitude and duration of a potential threat to others.


Date of Report: January 4, 2010
Number of Pages: 9
Order Number: RS22219
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Abortion and the House- and Senate-Passed Health Reform Measures

Jon O. Shimabukuro
Legislative Attorney


This report reviews the abortion provisions included in the health reform measures passed by the House of Representatives and the Senate. H.R. 3962, the Affordable Health Care for America Act, was passed by the House on November 7, 2009, by a vote of 220-215. H.R. 3590, the Patient Protection and Affordable Care Act, was passed by the Senate on December 24, 2009, by a vote of 60-39. The report also provides background information on the so-called "Hyde Amendment," which restricts the use of federal funds appropriated for the Department of Health and Human Services to pay for elective abortion services provided through the Medicaid program. H.R. 3962 and H.R. 3590 address abortion coverage by plans that would be available through a health insurance exchange with reference to the Hyde Amendment. Finally, the report considers assertions that the abortion provisions, particularly those added by the so-called "Stupak Amendment" to H.R. 3962, may be unconstitutional because they would appear to restrict abortion coverage for women.


Date of Report: January 15, 2010
Number of Pages: 10
Order Number: R41013
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Federal R&D, Drug Discovery, and Pricing: Insights from the NIH-University-Industry Relationship

Wendy H. Schacht
Specialist in Science and Technology Policy


Public interest in approaches that might provide prescription drugs at lower cost, particularly for the elderly, has rekindled discussion over the role the federal government plays in facilitating the creation of new pharmaceuticals for the marketplace. In the current debate, some argue that the government's financial, scientific, and/or clinical support of health-related research and development (R&D) entitles the public to commensurate considerations in the prices charged for any resulting drugs. Others view government intervention in price decisions based upon initial federal funding as contrary to a long-term trend of government promotion of innovation, technological advancement, and the commercialization of technology by the business community leading to new products and processes for the marketplace. 

The government traditionally funds R&D to meet the mission requirements of the federal departments and agencies. It also supports work in areas where there is an identified need for research, primarily basic research, not being performed in the private sector. Over the past 25 or more years, congressional initiatives have expanded the government's role to include the promotion of technological innovation to meet other national needs, particularly the economic growth that flows from the use of new and improved goods and services. Various laws facilitate commercialization of federally-funded R&D through technology transfer, cooperative R&D, and intellectual property rights. The legislated incentives are intended to encourage additional private sector investments often necessary to further develop marketable products. The current approach to technology development attempts to balance the public sector's interest in new and improved technologies with concerns over providing companies valuable benefits without adequate accountability or compensation. 

Some question whether or not the current balance is appropriate, particularly with respect to drug discovery. The particular nature and expense of health-related R&D have focused attention on the manner in which the National Institutes of Health (NIH) undertakes research activities. Critics maintain that any need for technology development incentives in the pharmaceutical and/or biotechnology sectors is mitigated by industry access to government-supported work at no cost, monopoly power through patent protection, and additional regulatory and tax advantages such as those conveyed through the Hatch-Waxman Act and the Orphan Drug Act. Supporters of the existing approach argue that these incentives are precisely what are required and have given rise to robust pharmaceutical and biotechnology industries. It remains to be seen whether or not decisions related to federal involvement in issues related to pharmaceutical R&D will change the nature of the current approach to government-industry-university cooperation. This report will be updated as events warrant.


Date of Report: January 6, 2009
Number of Pages: 31
Order Number: RL32324
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Health Insurance Continuation Coverage Under COBRA

Janet Kinzer
Information Research Specialist

Meredith Peterson
Information Research Specialist


Most Americans with private group health insurance are covered through an employer, coverage that is generally provided to active employees and their families, and may be extended to retirees. A change in an individual's work or family status can result in loss of coverage. In 1985, Congress enacted legislation to provide temporary access to health insurance for qualified individuals who lose coverage due to such changes. Under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA, P.L. 99-272), an employer with 20 or more employees must provide those employees and their families the option of continuing their coverage under the employer's group health insurance plan in the case of certain events. The coverage, usually for 18 months, can last up to 36 months, depending on the nature of the triggering event. Employers who fail to provide the continued health insurance option are subject to penalties. 

Since the start of the recession in December 2007, the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8%. Many of these individuals were eligible to continue their employer-sponsored health insurance, but did not elect coverage under COBRA because of the cost. On average, employees pay 27% of the premium for family coverage under an employer-sponsored health insurance plan. Those extending coverage through COBRA can be required to pay up to 102% of the premium, which averaged $13,643 for a family in 2009. Congress addressed this issue under Title III of the American Recovery and Reinvestment Act (P.L. 111-5), which included a temporary 65% subsidy for COBRA premiums. The subsidy is available to individuals who meet the income test and who are involuntarily terminated on or after September 1, 2008, and before February 28, 2010. 

The 111th Congress is currently considering whether to extend COBRA benefits beyond the current coverage. Some argue that even with the subsidy, high premiums make COBRA coverage unaffordable to many. Others maintain that in requiring employers to provide former employees with the option of continuing their health insurance coverage, COBRA has resulted in extra costs for employers (in the form of increased premiums for employers' group health insurance policies), as well as added administrative burdens. 

This report provides background information on continuation health insurance under COBRA and on the COBRA population. It will be updated as events warrant.


Date of ReportJanuary 6, 2010
Number of Pages: 14
Order Number: R40142
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Indian Health Care Provisions in H.R. 3962

Roger Walke
Specialist in American Indian Policy

Elayne J. Heisler
Analyst in Health Services


The 111th Congress has devoted considerable effort to health reform that seeks to increase health insurance coverage for more Americans and help control increasing costs while improving quality and patient outcomes. H.R. 3962, the Affordable Health Care for America Act, was passed by the House of Representatives on November 7, 2009. H.R. 3962 is based on H.R. 3200, America's Affordable Health Choices Act of 2009, which was originally introduced on July 14, 2009, and was reported separately on October 14, 2009, by three House Committees—Education and Labor, Energy and Commerce, and Ways and Means. One major difference between H.R. 3200 and H.R. 3962 is the addition of Division D, "Indian Health Care Improvement," which would reenact, authorize, and amend the Indian Health Care Improvement Act (IHCIA). Division D differs from much of the other divisions of H.R. 3962 in that it targets a specific population group—American Indians and Alaska Natives, a group that, in general, has lower health status, lower life expectancy, and higher rates of a number of diseases, including diabetes, than the U.S. population as a whole. The goal of the division—to improve the health of American Indians and Alaska Natives—is consistent with the changes proposed in other divisions that also propose to improve health care access and quality, augment the health care workforce, and increase access to mental health services. 

This report summarizes the provisions of Division D of H.R. 3962. The division contains two titles. Title I contains three sections (3101-3103), of which Section 3101(a) would replace current IHCIA language with new language that would reenact, amend, and reauthorize all eight titles of IHCIA. Section 3101(a) contains IHCIA's general provisions and its eight titles: (1) Indian health workforce, (2) health services, (3) health care and sanitation facilities, (4) access to federal reimbursements, (5) health services for urban Indians, (6) Indian Health Service (IHS) organizational improvements, (7) behavioral health programs, and (8) miscellaneous. Sections 3101(b) and (c) would make technical corrections to other federal law as necessitated by IHCIA Section 601's creation of a new Assistant Secretary for Indian Health. Sections 3102 and 3103 would make changes to Indian programs not in IHCIA. Title II of Division D contains five sections (Sections 3201-3205), three of which amend the Social Security Act (SSA) as related to American Indians and Alaska Natives. None of these sections amend IHCIA.


Date of Report: January 7, 2010
Number of Pages: 50
Order Number: R40902

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Noncitizen Eligibility and Verification Issues in the Health Care Reform Legislation

Ruth Ellen Wasem
Specialist in Immigration Policy


Health care reform legislation raises a significant set of complex issues, and among the thornier for policy makers are the noncitizen eligibility and verification issues. That the treatment of foreign nationals complicates health care reform legislation is not surprising given that reform of immigration policy poses its own constellation of controversial policy options. This report focuses on this nexus of immigration law and health care reform in the major health care reform bills that are receiving action. These are the America's Affordable Health Choices Act of 2009 (H.R. 3200), as reported by the House Committees on Energy and Commerce, Ways and Means, and Education and Labor on October 14, 2009, and folded into the Affordable Health Care for America Act (H.R. 3962), which passed on November 7, 2009; the Affordable Health Choices Act (S. 1679), as reported by the Senate Committee on Health, Education, Labor, and Pensions (HELP) on September 17, 2009; the America's Healthy Future Act (S. 1796), as ordered reported by the Senate Committee on Finance on October 13, 2009; and the Patient Protection and Affordable Care Act (H.R. 3590 as amended), which passed the Senate on December 24, 2009. 

Legal permanent residents (LPRs) are treated similarly to U.S. citizens under all the major health care reform bills. They are mandated to obtain health insurance, are eligible to purchase insurance through the exchange, and are eligible for the premium and cost-sharing subsidies if they meet the other eligibility requirements. This consistency of treatment holds regardless of when they entered the United States or whether they came initially as refugees or asylees. 

The proposed policies toward nonimmigrants (i.e., those in the United States temporarily, such as students and temporary workers) are more nuanced in large part because some classes of nonimmigrants reside legally in the United States for extended periods of time, some are employed and taxed as a result of those earnings, and some are on a track to become LPRs. 

The treatment of unauthorized aliens varies across bills and across the three elements (the individual mandate, eligibility for the exchange, and eligibility for subsidies). Unauthorized aliens would not be eligible for the premium and cost-sharing credits in any of the bills. The Senatepassed H.R. 3590 and the Senate Finance bill expressly exempt them from the mandate to have health coverage and bars them from the health insurance exchange. Another aspect of the legislation germane to the issue of noncitizens is the immigration and citizenship verification provisions of the bills. Under Senate-passed, three pieces of personal data would be used to verify citizenship and immigration status. The Social Security Administration would verify the name, social security number, and date of birth of the individual, and the Department of Homeland Security (DHS) would verify an individual's immigration status. While the Senate-passed H.R. 3590 has requirements similar to and compatible with the DHS Systematic Alien Verification for Entitlements (SAVE) system established by §1137(d) of the Social Security Act (SSA), H.R. 3962 would expressly build on the statutory authority of the SAVE system to verify citizenship and immigration status. 

None of the major health care reform bills would alter the noncitizen eligibility laws pertaining to Medicaid or CHIP. Moreover, none of the major health care reform bills would alter the Internal Revenue Code on the definitions of resident or nonresident aliens.

Date of Report: January, 08 2010
Number of Pages: 31
Order Number: R40889
Price: $29.95

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