Last week, Congress passed three acts impacting the healthcare industry—a tax extenders bill titled Protecting Americans from Tax Hikes of 2015, an Omnibus spending bill titled the Consolidated Appropriations Act of 2016, and a relatively non-controversial Medicare bill titled Patient Access and Medicare Protection Act. Among other policies, the new laws delay the “Cadillac Tax,” restrict CMS’s ability to use certain funds for payments for risk corridor shortfalls, and provide CMS with additional authority to process physician and hospital applications for a hardship exemption from complying with electronic health records Meaningful Use requirements.
The Protecting Americans from Tax Hikes Act of 2015, among other things, will delay the implementation of the so-called “Cadillac Tax” and suspend the medical device excise tax. Both taxes were first introduced as part of the Affordable Care Act. The implementation of the “Cadillac Tax,” which taxes certain health plans deemed to be overly robust, will now be delayed until 2020. Additionally, a two-year moratorium will be imposed on the 2.3% medical device excise tax. Accordingly, the medical device excise tax will not be imposed for sales from January 1, 2016 through December 31, 2017.
The omnibus spending bill, which was combined with the tax extenders bill and signed into law on December 18, 2015, restricts CMS’s ability to use certain funds for payments for risk corridor shortfalls. Pursuant to the risk corridor program, CMS transfers funds from plans with relatively lower-risk enrollees to health plans that, due to a higher-risk enrollee population, incurred higher than expected costs. Additionally, the omnibus spending bill included as an offset to federal spending a provision to limit federal Medicaid reimbursement to states for durable medical equipment, prosthetics, orthotics, and supplies to Medicare competitive bidding payment rates, beginning in 2019.
Finally, the Patient Access and Medicare Protection Act, which was also passed last week, provides CMS with additional authority to process physician and hospital applications for a hardship exemption from complying with electronic health record Meaningful Use requirements. It also freezes the payment rates for certain radiation therapy services for 2017 and 2018 and directs HHS to establish payment incentives for Medicare Administrative Contractors to reduce improper error rates in their jurisdictions. Lastly, the bill delays the application of competitive bid pricing to complex wheelchair accessories for one year.