Reg's Blog

Senior and Post-Acute Healthcare News and Topics

Doc Patch in the Works

Yesterday, the Speaker of the House (John Boehner) announced that a compromise is forthcoming to alleviate, for one year, the pending 24% payment reduction to the Physician Fee Schedule arising out of the current SGR formula. Ten days or so ago I wrote a post regarding a House bill that repealed the SGR but contained a “poison-pill” provision assuring its death in the Senate ( http://wp.me/ptUlY-gm ). As is the common methodology in Congress today, this initiative is a “patch”; another extension of the current status quo, delaying any SGR implications for one year.  Alas, while the SGR demands fixing, permanently, no traction is available among the parties to resolve the issue.

What the compromise does and doesn’t do is as much the center of debate as any efforts to replace the SGR with a more permanent formula.  In summary, the compromise;

  • Staves off the 24% cut but doesn’t restore any cuts related to sequestration.
  • It delays the implementation for hospitals of the 2 midnight rule for another six months.  The 2 midnight rule essentially reduces Medicare payments to hospitals for short in-patient stays.  It requires admitting physicians to have justification for the inpatient stay and if the same is lacking, the stay could be deemed (by RAC auditors) outpatient observation and thus, paid under Part B  at a lower rate.  The Bill would delay RAC auditors ability to review such stays until March of 2015 and give CMS authority in the interim and beyond, the ability to probe and educate but not re-classify stays.
  • It extends the implementation of ICD-10 for one more year.
  •  It extends certain programs that provide additional funding for rural hospitals.

While no one wins under these compromises, the Patch is likely to pass both houses quickly, viewed as a better alternative than the SGR cuts.  For post-acute providers, this is good enough news as the therapy fee schedule was subject to the same 24% reduction.

Interesting to note is that while the Bill extends the implementation of the 2 midnight rule, it doesn’t address the backlog of Administrative Appeals that continues to mount due to the Medicare RAC initiative.  This backlog is enormous and growing and it is the sole source initially, for providers to appeal RAC decisions.  I know of multiple providers today in the appeal queue waiting for a review of what appears to be, many erroneous determinations and shabby reviews of claims.   More on this in another post – later.

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March 27, 2014 Posted by | Policy and Politics - Federal | , , , , , , , , , , | Leave a comment

House Passes Doc-Fix Bill Destined for Nowhere

Earlier today, the House passed a bill that repeals the SGR formula used to derive physician reimbursement under Medicare.  For more specifics on the SGR, see a previous post I wrote at http://wp.me/ptUlY-ae .  The legislation is title SGR Repeal and Medicare Payment Modernization Act.

Unfortunately, the fate of the legislation is predestined as the bill includes an amendment from the Ways and Means Chairman (Rep. Dave Camp) that delays implementation of the tax/fee penalties concurrent with the Individual Mandate. It does not repeal or delay the mandate, simply the punitive measures for those that don’t comply.  Recall, the Affordable Care Acts requires all individuals above a certain income limit (tax filing limit) or without expressed hardship, to obtain health insurance by April of this year or face a penalty.  The penalty embedded within the act is a flat dollar floor with amounts increasing based on gross income.  With certainty, the inclusion of the amendment in the legislation spells a death sentence in the Senate where Senate Democrats hold a majority and Leader Reid, controls the flow of legislation for vote.  The bill will never see a vote in the Senate due to the Camp amendment.

The sticking point on repeal of the SGR is cost.  The Congressional Budget Office estimates that a repeal of the SGR, shifting to an indexed option with market baskets and productivity adjustments, will cost $138 billion over 10 years.  The dollars would need to come from an already shaky Medicare program that today, doesn’t really have another source of revenue save tax increases or contra-revenue infusions via reduced provider payments elsewhere in the industry.  The funding dilemma that occurs with the Camp amendment is that such an amendment actually saves the government $169 billion.  The savings is achieved by a projection of fewer people, sans the mandate penalty, having health insurance including under Medicaid and SCHIP (or CHIP).  With fewer people accessing the government-funded entitlement programs, the outflow is less, savings in amounts greater than the SGR repeal costs.

Once again, a fascinating insight into current federal health policy and the economics at play…

March 14, 2014 Posted by | Policy and Politics - Federal | , , , , , , , , | Leave a comment