One long-sought hospital goal included in the measure is repeal of the Independent Payment Advisory Board.

Feb. 9—A last-minute budget deal signed into law in the early morning of Feb. 9 includes a range of funding and policies long-sought by hospitals.

The measure replaced a House-passed continuing resolution from earlier in the week and included many of the same healthcare policy provisions, in addition to others.

Highlights for hospitals include a two-year delay in cuts to Medicaid Disproportionate Share Hospital (DSH) payments, Medicare payment extensions for rural providers, an additional four years of funding for the Children’s Health Insurance Program (CHIP), opioid addiction funding, and repeal of the Independent Payment Advisory Board (IPAB).

“The bipartisan measure does provide very broad support of a vast array of healthcare programs, which is a relief to many providers,” said Richard Gundling, vice president of healthcare financial practices for HFMA.

Hospital advocates were particularly pleased about the two-year delay to Medicaid DSH cuts, which were required by the Affordable Care Act (ACA) and had taken effect on Oct. 1, 2017. The delay removes $5 billion in cuts over the next two years and will add $1 billion to the total $43 billion in cuts that were previously required to occur by FY25.

“Their laudable bipartisanship on a two-year delay gives hospitals and policymakers time to find a long-term solution to uncompensated-care costs, which threaten access to care in communities nationwide,” said Bruce Siegel, MD, president and CEO of America’s Essential Hospitals.

The funding measure adds four years of CHIP funding, bringing the program’s total approved funding schedule to 10 years.

“CHIP supports the health of children in working families across the country, and these additional years provide greater predictability for states administering the program,” read a statement from the Children’s Hospital Association.

Children’s hospitals, which generate 52 percent of their gross revenue from Medicaid and CHIP, drew credit concerns from Moody’s Investor Services in January before enactment of the last temporary funding deal, which funded the federal government through Feb. 8 and included a six-year extension of CHIP funding.

The latest deal also includes $6 billion over two years to combat the opioid crisis.

“With opioid addiction devastating families and communities across America, much-needed new funding to fight this epidemic is included in this package,” Rick Pollack, president and CEO of the American Hospital Association, said in a written statement.

A recent nationwide study published in the Annals of the American Thoracic Society found that the average cost of treating opioid overdose patients who were admitted to hospital intensive care units increased by almost 60 percent from 2009 to 2015, reaching about $92,000 per case.

The repeal of IPAB, a 15-member board that was created by the ACA to recommend and implement Medicare payment cuts, followed a November repeal vote by the House of Representatives. The board was never appointed, but the ACA empowered the secretary of the U.S. Department of Health and Human Services with the same unilateral authority to cut Medicare spending if projected five-year average growth in per capita Medicare spending exceeded a specified target. The authority for the secretary also is now rescinded.

“By removing IPAB, Medicare beneficiaries no longer face the threat of reduced access to care as a result of arbitrary budget cuts,” said Mary Grealy, president of the Healthcare Leadership Council, which had led an alliance of nearly 800 patient and healthcare provider organizations in urging IPAB repeal.

Medicare Extenders

The measure includes funding for the so-called Medicare extenders, which generally benefit rural hospitals. Those provisions include:

  • Renewal of the Medicare Dependent Hospital Program, which expired Sept. 30
  • Renewal for five years of the enhanced Low-Volume Adjustment Program, which expired Sept. 30
  • Renewal for five years of the ambulance add-on payment program, which expired Sept. 30
  • Repeal of the Medicare payment cap on therapy services
  • Removal of the rental cap for durable medical equipment under Medicare for speech-generating devices
  • Extension for two years of the work geographic practice cost index (GPCI) floor, which boosts payments for the work component of physician fees in areas where labor costs are lower than the national average
  • Extension for five years of the Home Health rural add-on payment

An estimated 830 rural hospitals were financially impacted by the expiration of Medicare extenders, which specifically focus on such institutions, according to the National Rural Health Association (NRHA).

“For months, Congress has told us that they are listening to the voice of rural America, but yesterday, we finally saw action,” said Jessica Seigel, government affairs communications coordinator for NRHA. “Ensuring the future of these programs will give rural providers and facilities the assurance they need that Congress will keep its commitments to support delivery of affordable, quality care to rural communities.”

Also seen as critical by rural providers was the inclusion for community health centers (CHCs) of two years of funding, which had run out on Sept. 30. Most of the more than 1,400 CHCs, which provide care to more than 25 million patients, are based in rural areas. The measure increases CHC annual funding from $3.6 billion to $3.8 billion in FY18 and $4 billion for FY19.

Accountable Care Organizations

Various provisions in the spending measure specifically target accountable care organizations (ACOs). For instance, separate payments will be provided for ACO use of telehealth services, but only if the ACOs are in Medicare Shared Savings Program (MSSP) Track 2, Track 3, or future two-sided risk ACO models with prospective assignment.

Another provision will allow MSSP ACOs to have their beneficiaries assigned prospectively at the beginning of a performance year. Additionally, Medicare beneficiaries can choose to align with an MSSP ACO in which their main primary care provider is participating. Beneficiaries will be notified of the option but retain the freedom to choose any provider.

The measure also established the ACO Beneficiary Incentive Program, which allows certain two-sided risk ACOs to make incentive payments to all assigned beneficiaries who receive qualifying primary care services. Eligible ACOs can pay up to $20 per qualifying service directly to the beneficiary. No additional Medicare payment will be provided to cover the incentive payment costs.   

EHRs and Virtual Care

One provision related to digital operations will remove a requirement that the Centers for Medicare & Medicaid Services (CMS) tighten meaningful use standards for the Electronic Health Record Incentive Program over time, which hospitals feared would increase the difficulty for providers to meet those standards.

Beginning in January 2019, Medicare patients presenting with stroke symptoms can receive treatment through telehealth. The legislation eliminates the geographic restriction, thereby permitting payment to physicians who furnish such telehealth consultation services throughout the country.

Also beginning in January 2019, the measure will expand the ability of Medicare beneficiaries on home dialysis to use telehealth to receive required monthly clinical assessments for monitoring their condition.

Medicare Advantage  

Beginning in 2020, the funding measure will allow a Medicare Advantage (MA) plan to offer additional, clinically appropriate telehealth benefits in its annual bid amount beyond the services that currently qualify for payment under Part B. The measure will require MA plans to provide the same service on an in-person basis that it provides through telehealth.

The measure also permanently extends special-needs plans in the MA program.

MA plans in any state will be able to join, by 2020, an ongoing model that is testing value-based insurance design (VBID). CMS recently expanded the pilot, which aims to determine whether savings are achieved without negatively impacting quality, from 10 to 25 states.

MA plans also will be able to offer a wider array of supplemental benefits to chronically ill enrollees beginning in 2020. The measure requires that the supplemental benefits have a reasonable expectation of improving or maintaining the health or overall function of the enrollee and not be limited to primarily health-related services. MA plans will be able to provide targeted supplemental benefits to specific chronically ill enrollees.

Rules and Regulations

The measure also codifies CMS regulatory changes that aim to streamline and clarify rules for providers regarding compliance with the Stark Law, including regarding leases that are in violation and when signatures are required to document the terms of legal arrangements.

Also updated were both the civil and criminal penalties for fraud and abuse in federal health programs, which have largely remained static over the past 20 years.


Among the offsets in the funding measure is a rescission of $985 million from the Medicaid Improvement Fund, a reduction in the 2019 Medicare Physician Fee Schedule update from 0.5 percent to 0.25 percent, and reduced acute care inpatient hospital payment when a beneficiary is discharged early to a hospice program.

The measure also cuts $1.35 billion over 10 years from the Prevention and Public Health Fund created by the ACA, and rescinds $220 million from the Medicare Improvement Fund.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Friday, February 09, 2018