Budget deal isn't all good news

The Senate will cap off a tumultuous year for healthcare this week when it votes on a bipartisan budget agreement that not only sets top line spending levels for the next two years but also extends Medicare's sequester cuts through 2023 and staves off a 23.7% Medicare payment cut to physicians Jan. 1 under the sustainable growth-rate formula.

Wrapping up their work for 2013, House members voted 332-94 to approve a two-year federal budget deal that extends Medicare's current physician payment update of 0.5% through the end of March, as well as certain Medicare and other health programs. The Dec. 12 vote came during a week packed with healthcare hearings, bill markups and news conferences about new legislation just before the lower chamber took off for the holiday break. Passage of the budget bill would prevent another government shutdown in January. But it does not address the disputed issue of raising the debt ceiling, which Congress will likely have to take on in the first months of 2014.

Meanwhile, with implementation of the Patient Protection and Affordable Care Act improving following the administration's relatively successful HealthCare.gov reboot, President Barack Obama saw his approval ratings rise a bit last week, and congressional Democrats started pulling together again behind the law. A new CBS News/New York Times poll showed the president's approval rating at 42%, above the 37% level he had in November after the federal website's disastrous launch but still below his 46% approval rating in October. Public opinion of the ACA also saw gains, as the poll found 39% of Americans now approve of it, compared with 31% in November.

Scrutiny of Obamacare will continue as a top priority for House Republicans in 2014, with House Speaker John Boehner (R-Ohio) vowing his caucus will continue its oversight work into the new year.

Meanwhile, HHS Secretary Kathleen Sebelius, testifying before a House panel last week, announced she asked HHS' Office of the Inspector General to examine the development of HealthCare.gov to determine what led to its failed launch. Sebelius also asked CMS Administrator Marilyn Tavenner to hire a chief risk officer to oversee internal processes, practices and communication, and offer suggestions on how to prevent future problems.

The budget deal brings a sense of temporary fiscal peace to Washington for the first time in recent years. But hospital groups were disappointed that the agreement would extend Medicare's sequester cuts through 2023—two years beyond what was established in the Budget Control Act of 2011. Safety net providers had reason to cheer, however, as the deal would restore Medicaid disproportionate-share hospital funding in 2014 and delay 2015 DSH cuts for another year.

The Bipartisan Budget Act of 2013 unveiled by conference committee leaders Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wis.) would set overall discretionary spending for fiscal 2014 at $1.012 trillion and provide about $63 billion in sequester relief over two years through savings elsewhere in the budget. The legislation also would provide $85 billion in mandatory savings over 10 years. Of those mandatory savings, about $28 billion would come from extending Medicare and other mandatory sequester cuts in 2022 and 2023, two more years than what was called for in the Budget Control Act of 2011.

Legislation tacked on to the budget bill would extend a host of expiring Medicare and other healthcare programs, 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.

While “doc fixes” in previous years have left the nation's physicians relieved but still frustrated, this year's patch comes with signs of hope that a permanent SGR repeal is within reach. That's because the House Ways and Means Committee and Senate Finance Committee last week 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.

As those two panels and members of the House Energy and Commerce Committee hammer out their differences on an SGR repeal bill, their toughest challenge will be how to pay for it, which the CBO now estimates will cost about $116.5 billion over 10 years, far less than its earlier estimates of nearly $300 billion. There is no indication, however, of any agreement on the pay-for, which likely would involve pain for powerful interest groups.

The House-passed budget bill would pay for the three-month SGR patch and extension of Medicare and other healthcare programs—which the CBO estimates would cost about $8.3 billion over 10 years—largely by reshaping the payment system for long-term acute-care hospitals.

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

Follow Jessica Zigmond on Twitter: @MHjzigmond