Starting April 1, payments to physicians through Medicare are scheduled to drop 24 percent.  That precipitous decline is mandated by legislation enacted in 1997 to limit Medicare spending to a “sustainable growth rate” (SGR).  However, Congress has been unwilling to cut Medicare physicians’ pay in all but one year since the law was passed (in 2002, a 4.8 percent cut was imposed).  With the deadline looming, the House voted to prevent the reimbursement reduction for another year on March 27.  The Senate is expected to pass the bill on Monday, March 31, with a quick Presidential signing anticipated.
Also included in the bill are one-year extensions to Transitional Medicaid and the Qualified Individual program.  Transitional Medicaid is provided to parents who leave Temporary Assistance for Needy Families (TANF) for work.  The Qualified Individual program allows Medicaid to pay Medicare Part B premiums for low-income individuals.  In addition, a six-month extension is provided for the Maternal, Infant, and Early Childhood Home Visiting program, from its current expiration date of September 30 through the end of March, 2015.  The legislation also includes a demonstration project to expand community mental health services and a pilot for court-ordered outpatient mental health treatment, both inspired in reaction to the shooting at the elementary school in Connecticut a year ago.

This was a year when there was hope Congress could permanently replace the SGR, to stop the annual rounds of “doc fix” legislation.  Because the Affordable Care Act and other health care trends have reduced the growth in health care expenditures, the ten-year cost of replacing SGR is now estimated at $138 billion – high, but much lower than earlier estimates.  But coming up with a way to pay that bill has remained out of reach, and in a deal said to be orchestrated by House Speaker Boehner (R-OH) and Senate Majority Leader Reid (D-NV), yet another one-year patch will be approved.

The bill, the Protecting Access to Medicare Act (H.R. 4302), was whisked through the House on a voice vote so that the members who objected to the legislation would not have to have their vote recorded.  Some in Congress questioned the means of paying the bill’s cost, estimated at $22.1 billion, of which $15.8 billion is for SGR and the rest for a variety of provisions, including the low-income programs noted above.  The House bill offsets these costs in part by front-loading the 2 percent reduction in Medicare provider payments scheduled for 2024 so that it all occurs in the first six months of that year.  (The bill calls for a 4 percent reduction in the first six months, and no cuts in the rest of the year.)  Congress previously generated revenue by extending the 2 percent Medicare cut required by sequestration through 2024.  But in order for the savings to count as an offset to this bill’s costs, they had to be realized over a period ending in March 2024.  This is estimated to save $4.9 billion in FY 2024.  The remaining savings come from reducing payments to hospitals caring for a disproportionate number of low-income patients (known as Disproportionate Share Hospital payments).

The savings in the bill, at least those from front-loading the Medicare payment cut, are seen as more sleight of hand than real.  But leadership was willing to use the sleight of hand approach rather than let the large cut in physician reimbursements take effect.

Physicians much preferred a permanent fix.  But their opposition was softened by including a few other changes hospitals wanted.  Tucked into the bill are delays in implementing new standards for billing various diagnostic and in-patient procedures and a new rule that would only pay higher in-patient rates if the patient were admitted for at least two full days.

Although Senate Finance Committee Chair Ron Wyden (D-OR) has pointed out that the deadline for avoiding reduced payments to physicians is really the end of the week rather than Monday, March 31, House and Senate leaders Boehner and Reid were not willing to risk a further negotiation.  Neither was Leader Reid willing to attach the restoration of Emergency Unemployment Compensation to the bill, which would have required a delay in the SGR fix.  (See EUC article elsewhere in this issue.)  Advocates were hoping that risk would be taken, considering that jobless workers have been waiting for their loss of benefits to be fixed since December 28.

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