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Healthcare Business News

House passes budget bill with three-month doc-pay fix

By Jessica Zigmond
Posted: December 13, 2013 - 8:00 am ET

Congress on Thursday took steps toward changing the troublesome formula Medicare uses to pay physicians who participate in the program—but also toward delaying any definitive action until next year.

The House of Representatives voted 332-94 to approve two-year, federal budget agreement that also extends Medicare's current physician payment update of 0.5% through the end of March, averting a 23.7% payment cut to doctors scheduled to take effect on Jan. 1. The legislation covers the cost of the temporary fix and other Medicare provisions largely by changing the way the program pays for long-term acute care.

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Unveiled earlier this week by budget conference committee leaders Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wis.), the budget deal would set overall discretionary spending for fiscal year 2014 at $1.012 trillion and provide about $63 billion in sequester relief over two years through savings elsewhere in the budget. According to a summary of the bill (PDF), the legislation would also provide $85 billion in mandatory savings, including about $28 billion over 10 years, by requiring the president to sequester the same amount of mandatory budget resources—to Medicare and other programs—for an additional two years through 2023.

The legislation tacked on to the Bipartisan Budget Act of 2013—which the Senate is expected to consider next week—also extends a host of Medicare and other healthcare programs about to expire, such as the Medicare-dependent hospital program, which increases payments to small rural hospitals with significant Medicare populations; the Medicare inpatient payment adjustment for low-volume hospitals; and the so-called ambulance “add-on” payments, which increase the base Medicare reimbursement rates for ground ambulance trips originating in both rural and urban areas.

While similar “doc fixes” in previous years have left the nation's physicians temporarily relieved but perpetually frustrated, this year's patch comes with signs of hope that a permanent SGR repeal is not only possible, but actually within reach. That's because also on Thursday, the House Ways and Means Committee and Senate Finance Committee advanced legislation that would eliminate the SGR and replace it with a payment system that rewards quality over volume. And the short-term SGR patch tucked inside the House-passed budget agreement buys those committees more time to agree on a permanent solution.

“Congress is making enormous strides toward repeal and replacement of the flawed Medicare physician payment system. But more time is going to be needed to finish the job,” Rep. Henry Waxman (D-Calif.), ranking member on the House Energy and Commerce Committee—which unanimously approved its own SGR repeal bill in July—said on the House floor moments before lawmakers voted on the budget bill.

In the lower chamber, the House Ways and Means Committee unanimously approved its SGR legislation, which calls for a 0.5% payment update through 2017 and stable payment levels until 2023. Starting in 2024, all Medicare professionals would be provided annual updates of 1%, while those using alternative payment models would receive a 2% update. The panel's bill would also consolidate and improve all existing physician payment incentive programs into a new, single value-based performance incentive program that rewards high-performing professionals with additional payment increases.

The Senate Finance Committee then passed its own SGR repeal legislation in a voice vote after considering nearly 140 amendments, most of which were withdrawn. The panel did approve the bipartisan Excellence in Mental Health Act as an amendment to the bill. Introduced this year by Sens. Debbie Stabenow (D-Mich.) and Roy Blunt (R-Mo.), the legislation would establish pilot programs in 10 states to strengthen and improve access to care. Chuck Ingoglia, senior vice president for public policy and practice improvement at the National Council for Behavioral Health, told Modern Healthcare his group was “overwhelmed” by the support from the Senate committee and that he's hopeful the measure will survive the SGR negotiations with the House.

Those negotiations on the various SGR repeal measures will continue among Ways and Means and Senate Finance members and staff, as well as with members and staff of the House Energy and Commerce Committee, said Sarah Swinehart, a spokeswoman for the Republicans on the Ways and Means Committee.

As they hammer out differences, lawmakers will have to reach agreement on payment levels for physicians—the Senate Finance Committee measure that passed Thursday would maintain 2013 Medicare payment levels through 2023. And their greatest task will be how to pay for the SGR repeal, which the CBO now estimates to be about $116.5 billion over 10 years, far below its earlier estimates that reached as high as $300 billion.

Meanwhile, the House-passed budget bill would pay for the temporary SGR patch and extension of Medicare and other healthcare programs—which the CBO estimates would cost about $8.3 billion over 10 years—in large part by reshaping the payment system for the nation's long-term acute care hospitals.

While the CMS had signaled it would create a “site neutral” payment method for the entire post-acute care continuum, and the Medicare Payment Advisory Commission had proposed eliminating long-term acute care payments altogether, this legislation preempts both by creating a new site-neutral rate, said Jason Greis, an associate with McGuire Woods in Chicago.

“The LTACH community has been looking for a way to define itself for 10 years other than the 25-day stay requirement, so this system will provide additional regulatory and payment certainty that all the LTACHs have been looking for for many years,” Greis said.

As part of those changes, Medicare discharges from LTACHs would continue to be paid at full LTACH prospective payment system rates if a patient has spent at least three days in an acute-care hospital intensive care until before a long-term hospital stay, or if the patient has been on a ventilator for more than 96 hours in the LTACH and had stayed at an acute-care hospital immediately before entering the long-term care facility.

“I do think a positive development for the industry that provides payment certainty well into the future,” Greis said, adding that there may be some “sacrificial lambs” among LTACHs that won't be able to satisfy the new criteria.

Follow Jessica Zigmond on Twitter: @MHjzigmond

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