Obama Signs Measure To Avert Fiscal Cliff, Delay Medicare Cuts
On Wednesday, President Obama signed legislation (HR 8) to avert the fiscal cliff, postponing mandated spending cuts under sequestration from taking effect, the Wall Street Journal reports (Reddy, Wall Street Journal, 1/3).
The measure was approved by Congress on Tuesday, with the House voting 257-167 and the Senate voting 89-8 in favor of the bill (Pittman, MedPage Today, 1/1).
About the Legislation
The legislation -- negotiated by Vice President Biden and Senate Republican Leader Mitch McConnell (R-Ky.) -- includes a provision that delays for one year a 26.5% reduction to Medicare physician reimbursement rates and freezes reimbursement rates at current levels (Ethridge, Roll Call, 12/31/12). The "doc fix" would cost about $30 billion over 10 years and will be funded in part by cuts to Medicare and Medicaid payments to hospitals.
Specifically, hospitals will face a $10.5 billion reduction in Medicare payments over a decade for inpatient or overnight care through a downward adjustment in annual base payment increases. Hospitals also will face an additional $4.2 billion cut to Medicaid disproportionate share payments over the next 10 years (Carey, "State of Health," Kaiser Health News/California Report, 1/2).
Hospitals that treat a disproportionate share of uninsured patients and Medicaid beneficiaries already face payment reductions amounting to $18 billion between 2014 and 2020 under the Affordable Care Act (Roll Call, 12/31/12).
The one-year doc fix also will be funded through continuing a variety of Medicare policies, known as "extenders," including savings of:
- $600 million through a competitive bidding system for over-the-counter diabetic test strips (Carey, "Capsules," Kaiser Health News, 1/2);
- $1.7 billion from eliminating the Medicare Improvement Fund;
- $2.5 billion from adjusting the coding intensity between Medicare Advantage and Medicare fee-for-service; and
- $4.9 billion from payment adjustments for end-stage renal disease (McDonough, "Health Stew," Boston Globe, 1/2).
The legislation also delays by two months across-the-board cuts outlined in the sequester, including a 2% reduction to all Medicare reimbursement rates (MedPage Today, 1/1).
Legislation Alters ACA
The fiscal cliff legislation also makes certain changes to the ACA, the Washington Post's "Wonkblog" reports.
Under the ACA, HHS was to distribute $3.8 billion in loans to establish consumer oriented and operated plans, known as CO-OPs. The plans are designed to compete with the law's health insurance exchanges and test new methods of delivering health care. HHS already has distributed $1.9 billion to 24 not-for-profits in 24 states. However, the legislation prohibits HHS from distributing much of the remaining $1.9 billion in loans, though it does maintain 10% of the remaining funds to help cover the administrative costs of CO-OP plans that already have been launched.
The legislation also repeals the Community Living Assistance Services and Support Program, a long-term care program created by the ACA. HHS already had stopped implementing the program after an actuarial review found it would raise premiums (Kliff, "Wonkblog," Washington Post, 1/2).
Provider Response to Compromise Legislation
The American Medical Association applauded the legislation for temporarily delaying the payment cut under the sustainable growth rate formula, MedPage Today reports (MedPage Today, 1/1). However, AMA said that the "last-minute action" is "a clear example of how the Medicare program is increasingly unreliable for physicians and patients."
AMA President Jeremy Lazarus said that "Congress' work is not complete." He added, "Over the next months, it must act to eliminate this ongoing problem once and for all" ("Capsules," Kaiser Health News, 1/2).
Meanwhile, American Hospital Association President Rich Umbdenstock criticized the way lawmakers paid for the doc fix. He said, "While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals' ability to care for seniors and their communities" (Westphal, Rockford Register Star, 1/2).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.