Health Reform Weekly Digest

May 24-28 | 2010

ISSUED REGULATIONS
• The Medicare Coverage Gap Discount Program Model Manufacturer Agreement and Meeting Notice:
http://edocket.access.gpo.gov/2010/pdf/2010-12559.pdf
• Qualifying Therapeutic Discovery Project Credit:
http://www.irs.gov/pub/irs-drop/n-10-45.pdf
• Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and
Fiscal Year 2010 Rates and to the Long-Term Care Hospital Prospective Payment System and Rate
Year 2010 Rates (NOTE: the comment period for these regulations was waived)
http://www.federalregister.gov/OFRUpload/OFRData/2010-12563_PI.pdf
• Supplemental Proposed Changes to the Hospital Inpatient Prospective Payment Systems
http://www.federalregister.gov/OFRUpload/OFRData/2010-12567_PI.pdf
(Please see email attachment for a CMS breakdown of documentation and coding adjustments in the
FY 2011 IPPS)
• Public Health Service Act, Rural Physician Training Grant Program, Definition of ‘‘Underserved Rural
Community’’:
http://edocket.access.gpo.gov/2010/pdf/2010-12557.pdf
• Medicaid Program; Premiums and Cost Sharing
http://www.federalregister.gov/OFRUpload/OFRData/2010-12954_PI.pdf
• IRS Request for Comments Regarding Additional Requirements for Tax-Exempt Hospitals
http://www.irs.gov/pub/irs-drop/n-10-39.pdf

A LOOK AHEAD
• Early Retiree Reinsurance Program
o Comments are due June 4th
o IFR is finalized on June 1st
o Program is scheduled to start June 21st.
• Health Care Reform Insurance Web Portal Requirements
o Comments are due June 4th.
• Medicare Program; Medicare Coverage Gap Discount Program Model.
o There will be a meeting on June 1st at the Sheraton Baltimore City Center Hotel. Further
information on that meeting is available in the notice.

CMS MEDICARE BROCHURE

• This week, CMS distributed a brochure to Medicare beneficiaries with information on the Drug Discount
Program and “improvements” to benefits because of the new health reform law. This taxpayer funded
mailing contained numerous inaccuracies, omissions and representations that contradict conclusions
made by the CMS Chief Actuary and CBO.
• Republican Ways and Means members sent a letter to the HHS Secretary and a letter to the GAO
stating their concerns that the mailer violates propaganda distribution regulations.
• Senate Members (McConnell, Kyl, Alexander, Enzi, Thune, Grassley, Coburn and Barrasso) sent a
letter on the 27th to Secretary Sebelius identifying numerous inaccuracies and requesting information
about the development and review process for the brochure.
• A comprehensive list of inaccuracies and omissions in the brochure, along with additional response
materials is copied below.

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EXTENDERS
• On May 25, Senator Grassley introduced the “Protecting Against Indebting our Descendants through
Fully Offset Relief (PAID FOR) Temporary Extension Act of 2010.” A full summary is provided below.

UPDATED CRS REPORTS

• Mental Health Parity and the Patient Protection and Affordable Care Act of 2010:
http://crs.gov/ReportPDF/R41249.pdf
• Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA):
http://crs.gov/ReportPDF/R41196.pdf
• The Market Structure of the Health Insurance Industry:
http://crs.gov/ReportPDF/R40834.pdf
• Medicaid: The Federal Medical Assistance Percentage (FMAP):
http://crs.gov/ReportPDF/RL32950.pdf
• Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System:
http://crs.gov/ReportPDF/R40907.pdf
• Religious Exemptions for Mandatory Health Care Programs: A Legal Analysis:
http://crs.gov/ReportPDF/RL34708.pdf
• Medicare: Financing the Part A Hospital Insurance Program:
http://crs.gov/ReportPDF/RS20173.pdf

GAO REPORTS
• Nursing Homes: Some Improvement Seen in Understatement of Serious Deficiencies, but Implications
for the Longer-Term Trend Are Unclear
GAO-10-434R
 
ADMINISTRATION MATERIALS:
• Medicare Mailer: Medicare and the New Health Reform Law: What it means for you:
http://www.medicare.gov/Publications/Pubs/pdf/11467.pdf
• Webchat on Seniors and Medicare:
http://www.youtube.com/user/USHealthReform#p/p/E13B55ACDF862D29/0/EVYXO0liTNU
• Qualifying Therapeutic Discovery Project Credit
Treasury Fact Sheet:
http://www.treas.gov/press/releases/reports/5.21.10%20therapeutic%20discovery%20fact%20sheet.pdf
• Sebelius Speech on Implementation
http://www.hhs.gov/secretary/about/speeches/sp20100527.html

REPORTS ON HEALTH CARE REFORM:

• Hewitt Survey on Early Retiree Reinsurance Program
• Mercer Study on Employer Costs
• Kaiser Family Foundation on State Medicaid spending in health reform
• Towers Watson Survey on Employer Costs
• National Institute for Health Reform on High Risk Pools
• American Academy of Actuaries Issue Brief on Risk Assessment and Risk Adjustment

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Health Legislation Introduced this Week
Finance

S.3413
Sen. Feingold, Russell D [D-WI] - A bill to amend part D of title XVIII of the Social Security Act to require the
Secretary of Health and Human Services to negotiate covered part D drug prices on behalf of Medicare
beneficiaries.

Ways and Means

H.R.5417
Rep. Johnson, Eddie Bernice [D-TX-30] - To amend titles XIX and XVIII of the Social Security Act, as amended
by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of
2010, with respect to payment of disproportionate share hospitals (DSH) under the Medicare and Medicaid
programs.
*Also referred to Committee on Energy and Commerce

NEWS
Medicare Part D:
The Medicare Coverage Gap Discount Program Model Manufacturer Agreement and Meeting Notice was
printed in the Federal Register on May 26th.

This guidance was issued in conjunction with a massive public relations campaign orchestrated by CMS to
inform seniors about the rebate program and health reform law. Seniors will be receiving a mailer from CMS
with information on the Drug Discount Program and “improvements” to benefits because of the new health
reform law. Acting CMS Administrator Marilyn Tavenner says, “It’s important that our Medicare beneficiaries
get facts about this important new law timely (sic) so they can learn what stays the same and what will change
and improve in terms of their benefits.”

CQ reports that Republicans on the House Ways and Means Committee have requested that GAO review the
legality of the mailing. Republican Ways and Means members sent a letter to the HHS Secretary and a letter to
the GAO stating their concerns that the mailer violates propaganda distribution regulations. Senate Members
(McConnell, Kyl, Alexander, Enzi, Thune, Grassley, Coburn and Barrasso) sent a letter on the 27th to Secretary
Sebelius raising concerns about misleading statements in the mailer. Politico covers the presser House Dems
had on the mailers at which Speaker Pelosi said, the “mailings are an important part of an ‘aggressive outreach
campaign’ to challenge myths circulated during and after the vote on health reform…‘This is really a good
brochure…Every word is important.’” The Washington Post also reports on the story.

Qualifying Therapeutic Discovery Project Credit:

IRS guidance on the Qualifying Therapeutic Discovery Project Credit was released on the 21st. According to
the Department of the Treasury’s press release the new credit is, “is targeted to projects that show significant
potential to produce new therapies, address unmet medical needs, reduce the long-term growth of health care
costs and advance the goal of curing cancer within the next 30 years.” In a Washington Post article Ellen
Dadisman, a representative of BIO stated that, “"We expect the program to be heavily oversubscribed…I think
that's an indication of its popularity and its necessity." The AP also reports on the story. A fact sheet on the
credit is on the healthreform.gov site as well as a blog post.

Politics of Implementation:
The White House, using the WhiteHouse.gov blog counters the New York Times article on the Mercer study.
The article states that the study indicates, “that a little-noticed provision of the law could affect far more
employers than Congress had assumed.” The blog retorts, “The [NYT] story claims part of the law will saddle

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employers with new hidden penalties. That is not that case. What it will do is help bring down health care
costs and give more Americans the insurance they need and deserve.”

Secretary Sebelius met with insurers on the 27th. The New York Times reports on that meeting. The article
states, “Many employers have not decided whether to comply early. And some companies considering the
option have said employees will face higher premiums if they add adult children to the coverage they have.”

Early Retiree Program:

The White House is touting a study by Hewitt of 245 large employers that, “found most companies that offer
pre-65 retiree medical benefits intend to apply for the Early Retiree Reinsurance Program (ERRP) to offset a
portion of health care claims costs for retirees ages 55 to 64 and their families,” and that, “more than three-
quarters of the companies plan to pursue reimbursement under the Early Retiree Reinsurance Program.” The
White House blog post says, “The study is good news for retirees and their former employers.”

Medical Loss Ratios:

NAIC has announced that it will not make the June 1st deadline requested by HHS on MLR guidance. While
the law gives NAIC until the end of December, HHS pushed the deadline up for determining the new
regulations regarding MLR’s. Inside Health Policy reports that NAIC has announced they will not be able to
make that deadline and, “will likely be ready by late June or July, says a source who was on the NAIC
conference call.” Inside Health Policy also reports that the NAIC has given, “preliminary approval for eight
recommendations, including exempting costs associated with adjusting and settling claims from the definition
and aggregating information at the state and market level.” This comes after Sen. Harkin and Sen. Franken
sent a letter explaining congressional intent stating, “We…urge NAIC to define activities that improve quality
with a high degree of specificity, using examples – and in such a way that they can be easily audited by
regulators. Such activities should be proven to improve quality based on evidence and standards developed
by the Agency for Healthcare Research and Quality, the National Committee of Quality Assurance…They
should also provide direct services to enrollees.”

The Inside Health Policy article also summarized several issues which received preliminary approval.

Legal Challenges:
The Florida AG is one of the lead plaintiffs in the current suit challenging the constitutionality of the new health
care law. They have assembled some very good background/summary materials that are available at
http://www.healthcarelawsuit.us/

CATO Institute’s blog has a comprehensive update on the legal challenges to the new health care law by Ilya
Shapiro, a Senior Fellow in Constitutional Studies at the CATO Institute. The National Review looks at the
constitutionality of, “the federal government force[ing] people to buy a product — in this instance, health
insurance — from a private company?” Two opinion articles in the Wall Street Journal here and here
discussed for the ongoing suits and the constitutional basis for justifying the new law.

Medicaid:
Kaiser family foundation released a report reviewing the expansion of Medicaid under the new health reform
law.

Berwick Nomination:
The Berwick nomination is the subject of a number of editorial pieces. Real Clear Politics examines Dr.
Berwick’s view on rationing and support for the UK health care system. The Daily Caller also has a piece on
the Berwick nomination with a Dr. Berwick quote in which he says, “ ‘NICE is not just a national treasure,’ he
says, ‘it is a global treasure.’”

High Risk Pools:

A report released by the National Institute for Health Care Reform says that, “The new health care law does
not allocate nearly enough money to cover the estimated 5.6 million to 7 million Americans with pre-existing
medical conditions who will qualify for temporary high-risk insurance pools,” as reported by the New York
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Times. The report also says that, this deficit in funding “could leave hundreds of thousands of potential
participants with serious medical problems unable to obtain coverage.” According to the article, “Jessica
Santillo, a spokeswoman for the Department of Health and Human Services, questioned the study’s
assumptions about how many people would be eligible for risk pools, and the cost of covering them.”

Dependent Coverage:
NPR reviews dependent coverage until the age of 26 and the difficulties some recent graduates are
encountering.

Employer Coverage:
According to a May 2010 Towers Watson survey on health care reform, “Employers have little hope that the
Patient Protection and Affordable Care Act (PPACA) will help them achieve their top goals to decrease health
care cost trend and improve workforce health. Indeed, most employers are convinced that health care reform
will lead to increased costs and a stepped-up exodus from employer-provided retiree medical coverage.”

The President of the NFIB, Dan Danner explains the NFIB position on the new health reform law in an opinion
piece in the Wall Street Journal highlighting concerns about how the health care law will, “raise healthcare
costs and increase the overall cost of doing business” as well as his problems with the small business tax
credit.

Taxes:
Inside Health Policy reports on, “information spreading among conservative websites and via e-mail suggesting
a provision in the health care legislation aimed at providing transparency of health care benefits to workers will
result in tax increases.” The White House has responded with a blog post saying, “This claim is simply false…
Here are the facts: Next year, your W2 form will only change to show the value of the health care benefits that
you have received so you can know more about your benefits and you are an empowered consumer, but you
will absolutely not pay taxes on these benefits.”

Medicare Regulations:
On the 21st CMS issued “a supplemental proposed rule implementing changes in payments for inpatient stays
in acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) and long-term care
hospitals (LTCHs) under the LTCH Prospective Payment System (PPS) for Fiscal Year (FY) 2011 that were
required by [PPACA]. In addition, CMS issued a notice publicizing revised rates effective for payment years
beginning FY 2010 (or October 1, 2009). These revised rates are used to pay hospitals for discharges on or
after April 1, 2010, as a result of provisions in the Affordable Care Act. CMS will accept comments on today’s
supplemental proposed rule until June 21, 2010. CMS will review these comments along with timely received
comments on the April 19 proposed rule, and respond to all comments in a final rule. Attached is a memo from
CMS on the proposed rules.

Staffing:
According to Inside Health Policy’s blog, “Richard Popper, the executive director of Maryland Health Insurance
Plans, the state's high risk pool, will join HHS' new Office of Consumer Information and Insurance Oversight.”
At this time it is not known what his position will be.

CQ reports that “Mona Shah has been promoted to staff director for the Senate Health, Education, Labor and
Pensions Subcommittee on Retirement and Aging…She served as a professional staff member with the
subcommittee since March 2007.”

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 List of Inaccuracies and Omissions in the CMS Brochure Entitled
“Medicare and the New Health Care Law – What it Means for You”

Page 1:

Claim: “These are needed improvements that will keep Medicare strong and solvent.”

This statement ignores conclusions by the Chief Actuary for Medicare within the Department of Health and
Human Services in an April 22, 2010 memorandum (Chief Actuary's Memorandum) that plainly states that the
reduced spending resulting from the significant Medicare cuts in the health reform bill, "cannot be
simultaneously used to finance other Federal outlays (such as coverage expansions) and to extend the trust fund,
despite the appearance of this result from the respective accounting conventions."

Page 2:

More Affordable Prescription Drugs

Claim: “Over the next ten years, you will receive additional savings until the coverage gap is closed in 2020.”

According to the latest data from the Medicare Payment Advisory Commission (MedPAC) , about 3 million
beneficiaries -- out of 17 million non-LIS eligible Part D enrollees -- were actually exposed to 100 percent cost-
sharing in the Part D coverage gap or “donut hole.” The Congressional Budget Office (CBO) has concluded
that some of the changes enacted in the health reform law will likely raise Part D premiums almost 10 percent.
Despite these facts, the brochure fails to disclose that 17 million seniors enrolled in Part D are likely to see
significantly higher premiums for their drug coverage without seeing any benefit from the new law.

Improvements to Medicare Advantage

Claim: “The new law levels the playing field by gradually eliminating Medicare Advantage overpayments to
insurance companies.”

This statement in the brochure ignores statutory requirements that Medicare Advantage funds, termed in the
brochure as “overpayments to insurance companies,” must be used for lower cost-sharing or extra benefits for
seniors. The Medicare statute clearly states that 75 percent of the difference between the plan's bid and the
benchmark payment amount must go directly to seniors in the form of lower cost-sharing and extra benefits,
while 25 percent is returned to the federal government. In fact, these funds, again referred to in the brochure as
“overpayments,” help millions of low-income seniors – who can’t afford to pay $175 per month for
supplemental coverage in a Medigap plan – fill in the holes of traditional Medicare. As a result, these low-
income beneficiaries will be the most significantly impacted from these cuts in Medicare Advantage funding
despite the brochure's claim that this is an "improvement in Medicare."

Claim: “If you are in a Medicare Advantage plan, you will still receive guaranteed Medicare benefits.”

The brochure fails to disclose that a significant number of seniors will lose access to Medicare Advantage
benefits due to the health reform law.” According to CBO, Medicare Advantage enrollment 10 years from now
will be almost 2 million less than it is today. Enrollment was projected to increase by 4.8 million before the
health reform law passed. This decrease is the result of plans cutting benefits and dropping out of the program
entirely. So it is important to note that Medicare Advantage may no longer be an option for millions of seniors
as a result of the new law.

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Also, the brochure consistently uses the phrase “guaranteed Medicare benefits” to hide the fact that the changes
to Medicare Advantage will cut extra benefits – like lower cost-sharing, disease management and dental and
vision services – by approximately 50 percent. Seniors who rely on these benefits don’t care if they are
guaranteed or not. They just want to know they’ll continue to have to health benefits they have come to rely
on.

Page 3:
 
Better Access to Care

Claim: “Your choice of doctor will be preserved.”

This statement in the brochure ignores a number of conclusions by experts in direct contradiction of this claim.
First, the Chief Actuary’s Memorandum concluded that cuts in Medicare due to productivity adjustments "are
unlikely to be sustainable on a permanent annual basis" because of their impact on the program. In fact, the
Chief Actuary's conclusion is that 15 percent of Medicare Part A providers could be unable to sustain their
operations in the next ten years as a result of the drastic Medicare cuts in the new health reform law and would
therefore be unable to continue offering health care services to beneficiaries. According to the Chief Actuary,
absent legislation to intervene and correct the problem, these cuts could cause some providers to "end their
participation in the program" with the effect of "possibly jeopardizing access for beneficiaries." Claims in the
brochure that "choice of doctor will be preserved" are not support by the conclusions of the Department's own
Chief Actuary and are, at best, blatantly erroneous. Jeopardizing access to health care services will make access
to care worse and not better.

Second, the Patient Protection and Affordable Care Act (PPACA) failed to address the Sustainable Growth Rate
(SGR) problem so without additional legislation, it is unlikely that a beneficiary’s “choice of doctor will be
preserved”. This is a significant fact that is omitted from the brochure and a clear example of the brochure
failing to disclose all the facts. 

Claim: “The law increases the number of primary care doctors, nurses, and physician assistants to provide
better access to care through expanded training opportunities, student loan forgiveness, and bonus payments.”

These statements make broad assumptions that certain PPACA provisions (GME, student loans, and primary
care bonus payments) will, in fact, increase the number of primary care physicians and health care
professionals. There is no guarantee that the new health reform law will actually result in an increased number
of primary care physicians and other health professionals. In fact, many primary care physicians continue to
express concern about their shrinking numbers.

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Better Chronic Care

Claim: “Community health teams will provide patient-centered care so you won’t have to see multiple doctors
who don’t work together.”

This claim is overbroad and overstates the impact of PPACA. Section 3502 (Establishing Community Health
Teams to Support the Patient-Centered Medical Home) of PPACA establishes a program to provide grants to
eligible entities to establish community-based health teams. It requires state entities to apply for grants or enter
into contracts with eligible entities to establish community based health teams to support primary care. There is
a lengthy list of requirements to be a “health team” and eligible entities for grants must submit a plan for
achieving long-term financial sustainability within 3 years and meet other specific requirements.

The broad statement in the brochure that “Community health teams will provide patient-centered care so you
won’t have to see multiple doctors who don’t work together” implies that community health teams will be
available to provide patient-centered care to all Medicare beneficiaries. This statement is misleading because it
fails to include any caveats regarding the eligible entities or the extensive list of requirements for health teams
and primary care providers that would convey the limited applicability of this program and make the statement
accurate.

Claim: “If you’re hospitalized, the new law also helps you return home successfully—and avoid going back—
by helping to coordinate your care and connecting you to services and supports in your community.”

This claim is overbroad and overstates the impact of PPACA. Sec. 3026 (Community-Based Care Transitions
Program) of PPACA establishes a program that provides funding to eligible entities that furnish improved care
transition services to high-risk Medicare beneficiaries. To qualify for the program, a beneficiary would have to
be hospitalized in a hospital identified as having a high readmission rate and receive services from an
appropriate community-based organization that provides specific care transition services detailed in the section.
To qualify, an individual would also have to be a “high-risk” beneficiary based on a diagnosis of multiple
chronic conditions or other risk factors associated with a hospital readmission that includes at least one of the
specified risk factors, such as cognitive impairment or depression.

As noted in the previous paragraph, the broad statement that if you’re hospitalized, you will get help returning
home and avoiding readmissions is not accurate since it paints a misleading picture by implying that this
program would be available to all Medicare beneficiaries when in fact the program will only be available to
certain hospitals and high-risk beneficiaries.

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Page 4:
 
Keeps Medicare Strong and Solvent

Claim: “Over the next 20 years, Medicare spending will continue to grow, but at a slightly slower rate as a
result of reductions in waste, fraud, and abuse. This will extend the life of the Medicare Trust Fund by 12 years
and provide cost savings to those on Medicare.”

This claim that Medicare is strengthened is directly contradicted by the facts. First, reductions in growth are not
the result of reductions in fraud, waste and abuse as claimed in the brochure. The reductions in growth are the
result of drastic cuts in Medicare by the permanent productivity cuts and the cuts recommended by the
Medicare Advisory Board (IPAB). The Chief Actuary estimated in the Chief Actuary's Memorandum that the
permanent productivity cuts, which the Chief Actuary warns are “unlikely to be sustainable” would reduce
overall Medicare cost growth by 0.6 to 0.7 percent per years and the IPAB process would reduce Medicare cost
growth by 0.3 percent per year. It is therefore misleading to claim that fraud, waste and abuse provisions are
responsible for extending the life of the Federal Hospital Insurance Trust Fund by 12 years.

Also, the statement ignores conclusions in the Chief Actuary's Memorandum that the reduced spending
resulting from the significant Medicare cuts in the health reform bill, "cannot be simultaneously used to finance
other Federal outlays (such as coverage expansions) and to extend the trust fund, despite the appearance of this
result from the respective accounting conventions."

According to the Chief Actuary’s Memorandum, “the estimated savings…for one category of Medicare
provisions [permanent annual productivity adjustments] may be unrealistic.”

OACT also noted that “[a]verage Medicare costs per beneficiary usually increase over time” based on medical
price-growth, higher utilization of services and greater complexity of the services and that actual Medicare cost
growth per beneficiary was below the target level in only 4 of the last 25 years. Three of the four years were
immediately after the Balanced Budget Act of 1997, and Congress passed two subsequent laws to mitigate its
effects.

Also, during the last 25 years, the average increase in the target growth rate has been -.33 percent/year below
the average Gross Domestic Product increase, approximately the same target level as the SGR system.
Congress has overridden the SGR reductions for each of the last seven years and twice this year for the first five
months of 2010. Another SGR override is expected for the rest of 2010 and possibly several years beyond.
 

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 “Protecting Against Indebting our Descendants through Fully Offset Relief (PAID FOR) 
Temporary Extension Act of 2010”  
 
 Summary of provisions as introduced in the Senate on May 25, 2010 
 
RELIEF PROVISIONS 
 
Extension of Unemployment Insurance Provisions.  This proposal extends federal Emergency Unemployment 
Compensation (EUC08) benefits; 100% federal financing of state Extended Benefits (EB); and the $25 Federal 
Additional Compensation (FAC) benefits through July 7, 2010.  (This is the same as P.L. 111‐157 which 
extended these items through June 2, 2010.) 
 
Extension of COBRA Premium Assistance.  This proposal extends the 65‐percent COBRA continuation 
coverage subsidy for terminated workers through June 30, 2010.  The subsidy was originally enacted as part of 
the American Recovery and Reinvestment Act (ARRA) and was expanded later in 2009. 
 
Sustainable Growth Rate (SGR) Extension.  As of June 1, 2010, the sustainable growth rate update formula 
will require a 21 percent reduction in physician payments.  The provision would delay this payment reduction 
until July 1, 2010.  
 
Federal Poverty Guidelines.  Federal poverty guidelines for 2010 are scheduled to be lower than the 2009 
guidelines because of the interaction with the consumer price index.  A provision to keep the 2009 rates in 
place through May 31, 2010 was in the most recent extender bill. The provision keeps the 2009 guidelines in 
effect through June 30, 2010.     

Extension of National Flood Insurance Program.  Extends the provision through June 30, 2010.  
 
Extension of Small Business Loan Guarantee Program.  This provision would appropriate, out of any funds in 
the Treasury not otherwise appropriated, $60 million to extend, for one month, the American Recovery and 
Reinvestment Act provisions that eliminate certain 7(a) and 504 loan fees.  In addition, this provision extends 
the increase in government guarantees on 7(a) loans from 75% to 90% for one month from May 31, 2010 to 
June 30, 2010.   
 
OFFSET 
 
Use of Stimulus to Offset Spending. According to the Administration, $48.5 billion in discretionary funds are 
still unobligated.  According to a recent review of spending totals on the government website, 
www.Recovery.Gov, there is approximately $155 billion in discretionary funds still unspent.  This provision 
would provide the Office of Management and Budget with the authority to rescind up to $13 billion of the 
$48.5 billion of the remaining unobligated discretionary funds from last year’s stimulus bill. 
 

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 DOCUMENTATION AND CODING ADJUSTMENT
OVERPAYMENT RECOVERY PROSPECTIVE ADJUSTMENT
By law, the overpayments from FY 2008 and FY 2009 must be This adjustment is needed to correct the baseline going
collected by FY 2012. CMS has made no proposal regarding forward to ensure that future payments are not overstated.
FY 2012 adjustments yet.

FISCAL Applied Actual Overpayment Actual Documentation and Coding 5.4

YEAR Adjustment Documentation and Identified Based on Analysis of
Coding Identified FY 2009 Data

2008 0.6 2.5 1.9 Applied Adjustment (FYs 2008 and 2009) 1.5

2009 0.9 5.4 3.9

Additional Prospective Adjustment 3.9
TOTAL 1.5 5.8 * Not Yet Accounted For

*Subject to actuarial adjustment to be determined in FY 2012 to account

for accumulated interest. CMS has not yet proposed to reduce the payment rates
going forward.
PROPOSED COLLECTION OF OVERPAYMENTS
From FYs 2008 and 2009 Therefore, payments in 2011 will continue to be overstated
by 3.9 percent.
FISCAL YEAR Amount of Overpayment

2011 2.9 The statute does not provide authority in 2010 or 2011 (or
later years) to recoup this overpayment amount, which
totals approximately $4 billion each year.
2012 2.9 **

TOTAL 5.8 *

* Subject to actuarial adjustment to be determined in FY 2012 to account

for accumulated interest.
** TMA, Abstinence Education, and QI Extensions Act of 2007 (P.L. 110-
90) requires that overpayments from FY 2008 and FY 2009 be collected by
FY 2012, though CMS has not yet proposed an adjustment for FY 2012.