House Passes Health Legislation

The House passed several health-related bills last week: H.R. 1852, legislation to reauthorize the Children’s Hospitals Graduate Medical Education Payment Program through FY 2016 at an annual rate of $330 million; H.R.

2646, legislation to authorize $850 million for construction and renovations at VA medical facilities in California, Puerto Rico and Missouri and to authorize $50 million for the leasing of medical facilities in various parts of the country; and H.R. 2005, legislation to authorize $231 million per year from FY 2012-2014 for research and other activities at CDC and NIH.  Senator Jim DeMint has placed a hold on a similar autism bill in the Senate (S. 1094) stating that Congress should not prioritize research on one disorder or disease over another.  In addition Senator Mike Lee stated that he would object to moving the autism legislation without a spending offset.

House W&Ms Hearing on Medical Reimbursement Extenders

The House Ways and Means Health Subcommittee held hearings on medical provider reimbursement policies that expire between October and next July.  To extend the current payment policies would cost $2-2.5 billion per year.  Witnesses from hospital, skilled nursing facility, ambulance service, clinical laboratory and physician groups testified to the need to extend the current payment policies.  On the other hand, a consultant testified that Medicare cannot afford to spend $25 billion over ten years on all of the extensions.  He said that extensions would undermine provider incentives to be efficient and that Congress should instead reform the Medicare payment system.  Subcommittee Chairman Wally Herger said that just because Congress must act, it does not mean it should do so blindly.  The policies involved include:

  • hospital inpatient Section 508 wage reclassifications (costing $300 million a year);
  • the extension of the moratorium on Medicare Part B outpatient therapy caps ($900 million);
  • hospital outpatient hold-harmless payments ($200 million);
  • ambulance service add-on payments ($100 million);
  • a geographic work payment floor for physician fee schedule services ($500 million);
  • allowing certain independent labs to bill Medicare directly ($100 million per year);
  • mental health add-on payments ($100 million per year);
  • increased dual-energy x-ray absorptiometry reimbursements ($100 million); and
  • hold harmless payments for clinical laboratory services furnished in small rural hospitals (less than $50 million).

The need for a fix to the scheduled 30% cut to 2012 Medicare physician payments was also discussed.

In related news, MedPAC released a draft proposal of $230 billion in offsets to pay for a revamping of the SGR under the Medicare physician payment system, as follows:

  • a hospital payment update of 1% for 2012 including recovery of past overpayments for bill coding ($14 billion);
  • rebase home health payments in 2013 with no update in 2012 ($10 billion);
  • base Medicare reimbursements for durable medical equipment on categories never subject to competitive bidding ($8 billion);
  • repeal the Medicare Advantage demonstration program of bonus payments for higher quality ($6 billion);
  • copayments for home health episodes ($4 billion); raise the compliance threshold for inpatient rehabilitation facilities to 75% ($3 billion);
  • requiring drug manufacturers to pay Medicaid-like drug discounts for dual-eligibles ($75 billion);
  • rebase payments to skilled nursing facilities ($23 billion);
  • reduce payments by 10% for clinical lab services ($21 billion);
  • structure out-of-pocket charges to low-income beneficiaries to encourage use of prescription drugs ($17 billion);
  • apply an excise tax to Medigap plans ($12 billion);
  • pay physicians the same rate for “evaluation and management” visits in hospital outpatient departments as those in doctors’ offices ($10 billion); pay competitively bid rates for home oxygen ($5 billion);
  • reduce payments for preventable readmissions to skilled nursing facilities, home health agencies, long-term acute care hospitals and inpatient rehabilitation facilities ($4 billion);
  • reduce hospice payment rates in nursing homes 6% ($3 billion);
  • audit risk adjustment payments in the Medicare Advantage program ($3 billion).

MedPAC also endorsed the President’s plan for reducing the growth rate of Medicare spending by revamping the IPAB (the Independent Payment Advisory Board).  The Appendix shows the entire list of potential offsets.

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