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Healthcare Business News

Budget deal could overhaul Medicare long-term acute-care pay

By Jessica Zigmond
Posted: December 12, 2013 - 2:45 pm ET

(Story updated at 2:55 p.m. ET.)

The bipartisan budget deal reached this week could drag out efforts to overhaul Medicare's payment formula for physicians as lawmakers pursue a short-term fix and attempt to extend and make other tweaks to Medicare provisions, including significant changes to reimbursement for long-term acute care.

Two influential congressional committees will consider legislation Thursday to repeal Medicare's contentious sustainable growth-rate formula for physicians.

The House Ways and Means Committee on Thursday morning unanimously approved legislation that would not only repeal the SGR but also replace it with a payment system that rewards quality and performance over volume. That legislation would provide a 0.5% payment update through 2017 and would maintain stable payments through 2023. In 2024, all Medicare professionals would receive annual updates of 1%, while those in alternative payment models would receive a 2% update.

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Meanwhile, the Senate Finance Committee was considering similar legislation Thursday afternoon. Members and staff of both committees have worked on a joint framework, and a spokeswoman for the House Ways and Means Committee said there's a potential that both panels will come up with different products on Thursday. Discussions will continue and also include members and staff from the House Energy and Commerce Committee, she said. The Energy and Commerce Committee unanimously approved its own SGR repeal bill this summer.

At the same time, lawmakers are expected to attach amendments (PDF) to the bicameral, two-year budget agreement that Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wis.) unveiled Tuesday night that would extend Medicare's current payment update to physicians through March 31, 2014. The amendments also extend certain Medicare programs.

Adding to the unlikelihood that a permanent SGR repeal is imminent is the absence of any serious talk on how to pay for it, which the non-partisan Congressional Budget Office recently estimated will now cost $116.5 billion over 10 years- a bargain compared with earlier projections that went as high as nearly $300 billion. If congressional lawmakers and their staff members have ideas on how to pay for it, they're keeping mum.

“Though the score is the lowest ever, it must be paid for,” House Ways and Means Committee Chairman Dave Camp (R-Mich.) said in his opening statement Thursday. “And I am of no illusion that finding payfors will be an easy task; it will be very difficult,” he added. “Which is why we must keep the cost low, not just to make this more likely it will pass, but also to ensure limited taxpayers' dollars are spent wisely.”

Eric Zimmerman, a partner with McDermott, Will and Emery, said he thought discussions of an SGR fix would come to a boiling point between Jan. 15 and Feb. 7, when lawmakers were expected to negotiate budget reforms as the deadline approached for the country to hit its debt ceiling. But if Congress considers a temporary SGR patch and extends certain expiring Medicare this week, then the clock for the SGR repeal discussions is reset.

"The work that Ways and Means and Senate Finance are doing will hang out there until March," Zimmerman said.

The non-partisan Congressional Budget Office estimated (PDF) that the cost of a short-term SGR fix and the extension of some Medicare programs would cost about $8 billion over 10 years.

"It's surprising in its scope," Zimmerman said of the LTAC proposals. "This goes well beyond the provisions floated earlier or in the president's budget," he added. "It completely overhauls how long-term care hospitals are paid and how they're defined."

For instance, one proposed change suggests only paying LTAC prospective-payment system rates for patients who have been in a hospital intensive care unit for at least three days or who have been on a ventilator before being admitted to the LTAC, Zimmerman explained. The CMS had already signaled that it would make changes to LTAC criteria, and the changes proposed in the amendments to this week's budget agreement would get ahead of the agency on the issue.

"This has been a holy grail for the LTAC community and CMS and Congress for 10 years," Zimmerman added. "They've been trying to come to consensus on how to better define what is an LTAC and how to pay for LTAC services."

Follow Jessica Zigmond on Twitter: @MHjzigmond

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