Jan. 2 —
The fiscal cliff legislation passed by Congress on New Year’s Day helped avert a 26.5 percent Medicare physician payment cut for one year, extending current Medicare payment rates for physicians through Dec. 31.
The legislation includes “payment extenders” for hospitals, outpatient therapy, ambulances, and more. It also postpones sequestration—automatic, across-the-board cuts to most federal programs that will occur as part of the Budget Control Act—for 60 days. On March 1, 2013, a 2 percent reduction in Medicare payment will be realized, in addition to defense spending cuts of 9.4 percent and non-defense discretionary spending cuts of 8.2 percent.
The bill also provides a one-year patch to the sustainable growth-rate formula (SGR). However, repealing and replacing the SGR, a goal shared by both parties, remains out of reach for Congress due to the projected cost of such measures, which is currently estimated at more than $300 billion over 10 years.
Both the U.S. House of Representatives and the U.S. Senate passed the American Taxpayer Relief Act on Jan. 1. The legislation now goes to President Barack Obama for approval.
The patch and the payment extenders will be paid for through reductions to other Medicare programs, such as recoupment of previous coding overpayments to inpatient hospitals (savings of $10.5 billion over 10 years); rebasing of bundled payment for dialysis ($4.9 billion over 10 years) as well as Medicaid disproportionate share hospital payments ($4.2 billion over 10 years); reductions in therapy payments when multiple procedures are performed at the same time ($1.8 billion over 10 years); and rescinding of all unobligated funding for Consumer Operated and Oriented Plans ($200 million over 10 years).
Prior to the 60-day delay, reductions in Medicare payment were expected to result in $123 billion in savings over nine years, with hospitals absorbing $43 billion and physicians $14 billion. Part A and B reductions were expected to total approximately $5.5 billion and $4.5 billion in 2013, respectively, prior to the delay, as stated in an analysis by the Congressional Budget Office released this past September. HFMA Analysis:
The absence of a “grand bargain” raising the debt ceiling and addressing the outstanding $16.4 trillion federal debt means that hospitals—along with other providers—are unfortunately in for a period of continuing uncertainty related to Medicare and Medicaid. It is estimated that Congress will need to raise the debt ceiling in March, around the same time the 60-day sequester extension ends. Based on prior proposals to reduce the debt, Medicare and Medicaid payment cuts comprised 10 to 20 percent of the total reductions.
Publication Date: Wednesday, January 02, 2013