With Congress still gridlocked and another a government shutdown looming at the end of next week, a Senate panel laid the groundwork Wednesday to stave off at least some of the Medicare and Medicaid cuts facing healthcare providers.
The Senate Finance Committee approved the Better Mental Health Care, Lower-Cost Drugs, and Extenders Act of 2023, which would delay pending reductions in Medicaid disproportionate share hospital funding for safety-net facilities, scale back a Medicare pay cut for physicians that the Centers for Medicare and Medicaid Services finalized last week, extend expiring healthcare programs, expand Medicare coverage of mental healthcare and impose new limits on pharmacy benefit managers.
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The committee voted 26 to 0 to send the legislation to the full Senate, with Sen. Ron Johnson (R-Wis.) declining to vote. Senate Majority Leader Chuck Schumer (D-N.Y.) has previously said he intends to assemble a broad healthcare package before the end of the year, which could include some or all of the provisions the Finance Committee advanced Wednesday, in addition to measures that already cleared that panel and other committees.
Healthcare industry groups have grown accustomed over the decades to Congress making sure that vital programs continue—and stepping in when CMS writes regulations that reduce Medicare reimbursements or create policies unfavorable to hospitals, physicians, health insurance companies and other interests.
While Congress has generally heeded their calls, this year has seen an especially high level of strife on Capitol Hill. After a showdown over the debt limit led to a deal in May that set spending levels for fiscal 2024, the House Republican majority has been working on appropriations bills that are far below those levels. Congress was unable to pass funding for the full year, and settled for a stopgap that expires Nov. 17. A number of programs also are set to expire Dec. 31.
In most years, measures such as the one that delays DSH cuts get added to whatever full-year spending bill eventually moves. This year, that bill is nowhere near being crafted. New House Speaker Mike Johnson (R-La.) has proposed one or two more short-term funding bills that would last through mid-January or mid-April. Johnson has also floated passing a dozen separate stopgaps to give Congress more time to advance the regular 12 appropriations bills that it is supposed to pass every year.
Senate aides said the path to enacting the healthcare measures that emerged from the Finance Committee Wednesday is unclear, but expressed hope that bipartisan approval makes them more likely to be included in whatever vehicle the divided Congress can accept.
"It makes no sense to wait until the last minute," Finance Committee Chair Sen. Ron Wyden (D-Ore.) said. "Safety-net hospitals and others that are doing so much good work for low-income folks obviously depend on it."
The legislation the panel voted to send to the Senate floor addresses major healthcare industry concerns.
DSH cuts
Hospitals won a reprieve from $8 billion in Medicaid DSH cuts for 2024 and 2025 in the committee bill. The industry has complained since the Affordable Care Act of 2010 became law that its DSH cuts—enacted on the assumption that the ACA's health coverage expansion would substantially reduce uncompensated care—are harming safety-net providers.
"The projected coverage levels have not been realized, and hospitals continue to care for patients for whom they are not receiving adequate payment," the American Hospital Association wrote in a letter the the Finance Committee Tuesday. Congress has delivered for them every year.
Physician reimbursements
The Senate committee voted to blunt a pay cut for doctors next year. The Medicare physician fee schedule final rule for 2024 will reduce reimbursements by 1.25% overall, with increases for primary care clinicians and reductions for specialists such as radiologists.
Although the Finance Committee bill would not reverse that cut, it would soften its impact. The measure would replace CMS' 3.4% reduction to the Medicare physician fee schedule conversion factor with a 2.15% cut. The total effect on Medicare physician rates next year would be determined via future CMS rulemaking to implement the legislation if it were enacted.
The American Medical Association and other medical societies have pleaded with Congress to tackle what doctors say are inadequate Medicare payments. When CMS announced it would institute a small cut next year, the calls for lawmakers to step in grew in volume. "When adjusted for inflation, Medicare physician payment already has effectively declined 26% from 2001 to 2023 before additional inflation and these cuts are factored in," AMA President Dr. Jesse Ehrenfeld said at a news conference last week.
"Next year, the Finance Committee will take a deeper look at Medicare physician payment as several provisions in current law need to be re-examined," Wyden said.
ACO bonuses
Accountable care organizations secured at least a portion of Medicare bonus payments that are set to expire. Under current law, ACOs that reduce spending are eligible for an extra 3.5%. The Finance Committee provided for a 1.75% bonus.
The National Association of Accountable Care Organizations had been pushing for more, but said in a statement that the legislation "sends a strong signal that Congress is committed to ensuring adequate clinician payment and incenting the movement to value-based care."
The Senate Finance Committee package also includes provisions that would:
- Prevent cuts to the physician work geographic index element of the Medicare physician fee schedule through 2024, costing $542 million.
- Revise the phase-in of Medicare clinical lab test payment changes, which would decrease Medicare spending by $589 million over 10 years
- Extend the Independence at Home demonstration program through 2025.
- Extend the so-called 75/25 blended payments for durable medical equipment that boost payments by about 40% for one year, costing $177 million over 10 years.
- Provide $50 million for outreach and assistance to low-income Medicare beneficiaries through Aging and Disability Resource Centers, State Health Insurance Assistance Programs and Area Agencies on Aging.
Correction: An earlier version of this story contained an incorrect figure for the Medicare physician fee schedule conversion factor provision in the Senate Finance Committee bill.
