American Jobs and Closing Tax Loopholes Update

Prior to the Memorial Day recess (holiday), the House passed its re-shaped version of the bill.  The re-shaping primarily involved spending constraints; reaction to wide-spread criticism (public) of current (and recent) Congressional deficit spending binges as well as a realization that fall elections draw ever closer.  Specifically, what the House did was:

  1. Abandoned any additional extension of the added FMAP (Medicaid match) from the Stimulus Bill – deadline remains December 31, 2010.
  2. Took up the “doc-fix” issue separately, passing a two-year fix to the pending cuts (still set for June 1 as the Senate has yet to reconvene and address this issue).
  3. Made the effective date of the RUGs IV implementation October 1, 2010.

What now occurs is the revised legislation heads to the Senate for review, modification, approval, etc.  As the Senate is not set to reconvene until June 7 (another week), the issue (once again) of physician fee schedule cuts and corresponding Part B cuts in therapy, etc. heads into limbo.  Congress has taken repeated temporary measures to stave-off these cuts while it works to a more permanent fix and it is likely, another emergency, temporary “stay” to the cuts will be forthcoming (I doubt the Senate and House will come to agreement on final legislation during the ensuing two to four-week period).  As in the last go around on a “cuts deadline”, CMS has instructed its intermediaries to hold claims open for the first ten days of the month in anticipation of some direction from Congress.

Regardless of the legislative machinations yet to occur between the House and the Senate, real fiscal issues are at play.  The states are in desperate need of continued financial assistance for their Medicaid programs albeit, even a six-month extension of the FMAP will only result in a bandage change applied to a gaping flesh wound.  State budgets are predominantly in a horrible stay of disarray, awash in deficits and limited in their options for additional revenue via taxation.  The slow recovering economy does not foretell an anytime soon switch in fortunes for the states; revenues will continue to lag until jobs and thus, corporate and personal income fortunes reverse.  Medicaid, as I have written before, is an awful shell game.  To garner additional FMAP that the states desperately need requires additional program expansion and spending – funding that the states cannot afford to continue without more federal dollars.  At some point, with the national deficit now over $13 trillion and rising, the Feds will need to pull the plug on all of the deficit spending, “bail-out” programs that are unsustainable (like added FMAP) and the recipients will have to “face the concessionary music”.

The “doc-fix” is and has been, a major policy issue and boondoggle.  The problem is the underlying sustainable growth formula that is used to set physician (and other Part B) reimbursement rates.  Fixing the formulaic issue is what needs to occur but for the time being, adrift in a sea of health policy debacles courtesy of a misguided reform bill that is now law, Congress is effectively hamstrung.  The political peril of allowing physician fees to plummet by 21% is balanced opposite the political peril of additional deficit spending, especially on health care, immediately prior to a fall election cycle.  Health care today is a major political issue and front and center in this issue are claims made that the PPACA (reform bill) would reduce the deficit, primarily by making Medicare more efficient (cuts).  Adding back new monies to physicians and other providers under Part B is fuel for certain economists, deficit hawks, etc., who all publicly denounced the PPACA deficit reduction claims as unattainable, unrealistic (Congress won’t have the nerve to sustain the cuts), and of course, based on funky math (counting savings from cuts while creating new entitlements). 

I believe this may be the shining example of a “political pickle” for Congress…


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