Senate Democrats reached a rare deal with their counterparts across the aisle late Thursday, working out a six-month Medicare physician pay patch with a 2.2% increase but using a measure largely seen as hostile to hospitals to help pay for it.
Additionally, a provision that would have extended a higher federal share of Medicaid funding to state governments—though at a cost of $24 billion—was stripped as Senate leaders tried to dial back the amount of deficit spending in a long-stalled package of tax extenders and health measures.
Senate Finance Committee Chairman Max Baucus (D-Mont.) reached the deal with Sen. Chuck Grassley (R-Iowa) late on Thursday. Senate leaders will try to "fast track" the measure—a process that requires a unanimous consent but not a roll-call vote—on Friday just as a 21% cut in Medicare payments goes into play.
Under the agreement, the reworked pay formula would be fully offset by changes to employer pension fund rules and to the so-called “72-Hour Rule,” which the House passed in its version of a broad package of tax extenders and health spending despite furious objections from the hospital lobby.
This provision prohibits hospitals from retrospectively billing to “unbundled” payments for therapeutic services that were provided prior to when the bill goes into effect and that were performed with 72 hours of an unrelated hospital admission.
The American Hospital Association fought hard to have the rule stripped from previous versions of the bill, but it has nevertheless stayed intact through a number of legislative rewrites to the legislative package.
“While we understand that there's a real need to prevent physicians from being cut, this is the wrong type of way to pay for that kind of fix,” AHA Executive Vice President Rick Pollack said. “It's robbing Peter to pay Paul.”
Pollack said the AHA and others would send a letter to lawmakers today urging them to block the measure.
The Congressional Budget Office estimates that the latest tweak to physician payments would cost $6.3 billion. Earlier estimates from the CBO have said that the 72-Hour Rule would save Medicare $4.2 billion.
And in a preliminary analysis, the CBO estimated that the pension funding relief provisions, which were originally part of an amendment sponsored by Sen. John Thune (R-S.D.), would save roughly $675 million.
Senate leaders want to try to pass the amended version using a procedural move that requires all members to essentially agree to the package. It's unclear if there will be any objections.
The package would also have to be passed in the House. The House is in recess until next week and the 21% physician pay cut goes into effect as of Friday, meaning the would stay in effect until House lawmakers return.
