House approves SGR “patch” with Medicare extenders, other hospital provisions Last Updated: August 13, 2014
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The House today passed by a voice vote a one-year physician payment fix, the Protecting Access to Medicare Act of 2014, that would also extend expiring Medicare provisions and offset the cost by reducing payments to hospitals and other providers. The Senate is likely to vote on the bill later today.

House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) negotiated the legislation to stave off a 24 percent cut in physician pay set to go into effect on April 1. Newly inducted Senate Finance Committee Chairman Ron Wyden (D-OR), as well as major physician groups, are opposing the measure on the grounds that Congress should instead move forward on a permanent overhaul of the sustainable growth rate (SGR). Wyden is pushing for enactment of his bill, which consists of the bipartisan, bicameral long-term SGR reform policy agreed to in February and uses unspent war funds to pay for it. However, after discussions between the Speaker and Democratic Leader Pelosi, the one-year stop-gap approach was viewed as the only viable option, given the impending expiration of the existing ‘patch’ and the impasse over offsets for long-term reform.

Major provisions of the Protecting Access to Medicare Act of 2014

As Premier reported yesterday, the House-passed SGR patch legislation would:

  • Provide physicians a 0.5 percent Medicare payment update through December 31, 2014, and a 0 percent update from January 1, 2015 through March 2015.
  • Extend for a year most of the current Medicare and Medicaid provisions that are currently scheduled to expire on March 31. Among others, these include:
    • Low-volume hospital adjustment
    • Medicare Dependent hospitals (MDH) program
    • Therapy cap exceptions process
    • Medicare reasonable cost contracts
    • Ambulance add-ons
    • Work geographic practice cost index (GPCI) floor
    • Funding for quality measure endorsement, input, and selection
    • Technical changes to Medicare long-term hospital amendments
  • Allow CMS to extend the two midnight moratorium on short-stay inpatient admissions for the first six months of 2015, but stop short of requiring CMS to implement any revised policy
  • Delay until October 2015 the implementation of ICD-10
  • Require a Government Accountability Office report on the Children’s Hospital Graduate Medical Education program
  • Fund grants to assist outpatient treatment programs for individuals with serious mental illness

Offsets

The Congressional Budget Office (CBO) estimates the one-year SGR patch itself would cost $15.8 billion and the extenders another $2 billion. Offsetting the cost of the legislation is a number of provisions impacting hospitals. The bill would be paid for by (CBO savings score in parentheses):

  • Realigning the 2024 sequester amount: Recall that earlier this year, Congress extended the sequester through 2024 in the military COLA bill. However, given 10-year budget scoring rules, the cut only applied to the first half of 2024. The SGR patch legislation would double the cut to 4 percent the first half of 2024 to approximate a 2 percent cut across the whole year. ($4.9 billion)
  • Extending of the Medicaid disproportionate share hospital (DSH) cuts already in the healthcare reform law: The Medicaid DSH adjustment in the legislation would push back the start of the cuts to 2017, rather than 2016, to give more time for coverage expansion to occur, but would extend the DSH reductions through 2024. ($4.4 billion)
  • Implementing value-based purchasing for skilled nursing facilities, starting in October, 2019, reducing base rates by 2 percent across the board. (70 percent of the savings will go to well-performing providers, with the remainder going to the Treasury) ($2 billion)
  • Modifying orally-administered end-stage renal disease drugs ($1.8 billion)
  • Delaying reimbursement rebasing for laboratory test until 2017, while also capping the maximum cut per test that can take place in the first two years at 10 percent and, for 2020-2022, at 15 percent ($2.5 billion)
  • Allowing CMS to adjust Medicare physician reimbursement to address misvalued codes ($4 billion)
  • Instituting quality incentives for computed tomography diagnostic imaging and setting in place appropriate use criteria ($200 million)
  • Using funding from transitional fund for SGR reform: ($2.3 billion)