WASHINGTON—The House is pushing forward with plans to vote Thursday on a permanent repeal of Medicare's loathed sustainable growth-rate formula for paying doctors.
The unveiled by the House on Tuesday also includes a two-year funding extension for the Children's Health Insurance Program and community health centers, a six-month extension of the moratorium on enforcement of the “two-midnight" rule for short hospital stays and a bundle of other Medicare payment provisions.
Even the providers facing Medicare cuts devised to partially offset the cost of replacing the SGR said Tuesday that they support the bill.
But the package still faces a multitude of political hurdles, most notably continuing opposition from Senate Democrats. They've insisted on a four-year extension of CHIP and balked at language restricting abortion services at community health centers, even though it would not constitute a change from current policy.
Senate Minority Leader Harry Reid was noncommittal about whether his caucus would support the package. “I believe we should wait until we get what they've done in the House," Reid said during a news conference Tuesday at the Capitol.
If Senate Democrats are united in opposing the package, they can block it from coming up for a vote. That would sow confusion because the House and Senate are set to adjourn at the end of the week for spring break and aren't slated to return until April 13. The current SGR patch expires at the end of March and doctors would face a 21.2% reduction in Medicare payments if Congress doesn't take action.
The main details of the House plan haven't changed much since they were first reported by Project Japan on March 13. The $200 billion- package will be offset by roughly $70 billion in spending reductions, split between provider cuts and increased costs for wealthy Medicare beneficiaries.
But the House package released Tuesday contained more details. The provider cuts are primarily at the expense of post-acute facilities and hospitals.
Post-acute care providers, including skilled nursing facilities and long-term-care hospitals, will see their market-basket rates increase by no more than 1% in 2018 under the proposed deal. According to the American Health Care Association, which represents post-acute providers, those increases have ranged from 1.1% to 2% over the last four years. While the initial cut is likely to be marginal, it will carry forward and reduce future payments to those facilities. The total savings is expected to be in the range of $15 billion over a decade.
Eric Zimmerman, a principal with McDermott + Consulting, said the proposal is similar to other payment cuts that Congress has ginned up to pay for short-term doc fixes in the past. “We've seen lots of examples of Congress saying 0% update for these services or those services,” Zimmerman said. “This is a pretty classic turning the dial.”
The other significant cut is to hospitals. The specifics are complicated, but basically the CMS determined that hospitals were paid roughly $11 billion too much after a patient classification change in 2008. Congress authorized the CMS to claw back some of that money through rate reductions between 2014 and 2017. In 2018, those rates are supposed to pop back up by 3.2%. However, the House package is proposing to phase that increase in over six years at a rate of 0.5% a year. That's expected to save roughly $15 billion.
“This is kind of sneaky,” said Adam Borden, a director with the consulting firm Avalere Health.
Finally, the House deal would make a couple of changes to cuts to the Disproportionate Share Hospital program that were part of the Affordable Care Act. For starters, it would delay those cuts by another year, pushing them back to fiscal year 2018. Hospitals have cried foul over the DSH cuts because only about half the states have opted to expand Medicaid, which was supposed to compensate for the DSH reductions. But the SGR deal would also authorize those cuts to continue for another year, through 2025. That reduces anticipated spending by roughly $4 billion in the next decade.
The SGR plan also contains a package of Medicare payment provisions that would be extended for two years. Those include increased payments to rural hospitals with a disproportionate share of Medicare patients and a grant program to pay for in-home visitations for poor families with young kids.
Some significant policy provisions were also included in the package released by the House on Tuesday. The moratorium on enforcement of the controversial “two-midnight rule" for short hospital stays would be extended by six months, through the end of September. Hospitals had been lobbying for the extension, arguing that it will give the CMS time to provide additional guidance on appropriate payment rates for short hospital stays that involve complex, costly medical procedures.
The House package would also reverse the CMS's decision to eliminate bundled payments for surgical services that span either a 10- or 90-day period. Physicians had complained that the change put forth by the Obama administration would punish them financially. Instead, under the SGR plan, the CMS would be required to collect information starting no later than 2017 to determine what services are being provided and whether payments are appropriate.
“It's a big issue for surgeons, and obviously hospitals that own any physician groups,” Borden said.
But there were also some notable provisions that didn't end up in the package. There is no extension of the deadline for implementing the oft-delayed ICD-10 diagnostic and procedural coding system. Some doctors' groups have been pushing for an extension beyond the Oct. 1 deadline. In addition, there was no provision dealing with site-neutral payments, which many healthcare policy watchers had anticipated might be included to raise revenues.
“All those still could be added,” Zimmerman said. “I don't know if these numbers get them where they need to be.”
Of course, all of the provisions in the legislation would become irrelevant if the doc fix package isn't passed. The prospects look increasingly dicey as the clock ticks toward adjournment. Supporters of the legislation were still warily watching for a financial analysis of the House proposal by the Congressional Budget Office, which could drop at any moment.
Beyond any fiscal landmines contained in the CBO report, most observers believe the CHIP and abortion issues are most likely to trip up the deal. On Tuesday, the co-chairs of the House Pro-Choice Caucus, Reps. Louise Slaughter (D-N.Y.) and Diana DeGette (D-Colo.), issued a statement endorsing the plan in an effort to quell resistance on that front.
The House package has largely assuaged healthcare interests, even those facing cuts to help pay for the SGR repeal. The American Hospital Association sent a letter to House members on Tuesday backing the deal. “While we are disappointed that hospitals would be looked to as an offset given that Medicare already pays less than the cost of delivering services to beneficiaries, the package strikes a careful balance in the way it funds the SGR repeal and embraces a number of structural reforms to the Medicare program,” reads the letter from AHA President Rich Umbdenstock.
Similarly, Mark Parkinson, CEO of American Health Care Association, said the group is “enthusiastically” backing the doc fix deal despite the cuts included for its members. “Each year we are in a battle up on Capitol Hill to determine whose turn it is to pay for the doc fix,” Parkinson said. “There's no reason to believe this will get any better without a permanent doc fix.”