CMS Delays Medicare’s SGR Cuts, ‘Two-Midnight’ Rule Enforcement

On Wednesday, CMS said that, barring Congressional action, it would not begin processing a 21% cut to physician reimbursements under Medicare's sustainable growth rate formula until April 15, The Hill reports. The payment cuts took effect on Wednesday (Ferris, The Hill, 4/1).

Background

The House last week voted 392-37 to approve legislation (HR 2) to permanently replace Medicare's SGR.

The bill includes several other measures related to health spending, such as funding for community health centers, which serve low-income individuals in every state (California Healthline, 3/27). In addition, the bill would delay enforcement of the Medicare "two-midnight" rule for six months (Demko [1], Modern Healthcare, 4/1).

Overall, the SGR replacement measure would cost $213 billion. The deal would offset about $70 billion of the projected costs. Roughly half of the possible deal's offsets would come from cuts to hospitals, insurers and acute-care providers. The other half of the offsets would come from cuts to Medicare beneficiaries, such as additional means testing for high-income beneficiaries.

The Senate is not scheduled to consider the measure until it returns from recess on April 13 (California Healthline, 3/27).

Announcement Details

A CMS official said that while the agency would delay processing the cuts until April 15, "[a]ny delay in processing claims beyond April 15 would negatively impact providers' cash flow." The agency last week said that it was preparing to process the payment cuts if Congress does not act on the measure.

An agency official added, "Should Congress act subsequently, CMS will reprocess those claims paid at the lower payment rate to reflect the new payment rates" (The Hill, 4/1). However, according to the AP/San Francisco Chronicle, such a move could increase administrative costs (AP/San Francisco Chronicle, 4/1).

CMS also announced that it would delay enforcement of the two-midnight rule until the end of April to provide Congress more time to pass an SGR replacement package (Demko [1], Modern Healthcare, 4/1). CMS had been scheduled to start enforcing the rule after a congressionally-imposed delay ended at the end of March (California Healthline, 3/18).

Stakeholders Continue SGR Replacement Lobbying Efforts

Meanwhile, stakeholders are continuing to lobby Senate lawmakers on the SGR replacement bill, with some urging Congress to pass the bill as-is and others recommending changes, Modern Healthcare reports.

For example, the American Medical Association and the American Hospital Association have been urging their supporters to contact their senators to encourage them to pass the measure.

Meanwhile, AARP is advocating for several changes to the package, including:

• Making permanent a program providing exceptions to a cap on physician therapy care for beneficiaries that would be extended for two years under the bill; and
• Increasing the income threshold from 135% to 150% of the federal poverty level for a program -- which would be made permanent under the legislation -- that offers premium assistance to low-income beneficiaries.

In addition, some children's health advocacy groups are continuing to urge lawmakers to extend funding for the Children's Health Insurance Program for four years, rather than for two years as called for by current measure. First Focus President Bruce Lesley said his group and Senate staffers are discussing a "deficit neutral" means of expanding CHIP funding for two additional years.

However, according to Modern Healthcare, most health policy experts do not expect lawmakers to want to make changes to the package, which would require sending the revised bill back to the House.

Tom Nickels, senior vice president for federal relations at AHA, said, "With respect to CHIP [funding], we would all like four years. But to reopen the whole package I think is a big mistake and I don't see it happening" (Demko [2], Modern Healthcare, 4/1).